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To what degree can the Fed control interest rates?
Posted: Thu May 19, 2011 12:13 pm
by moda0306
What do you think folks??... just trying to start a discussion on the fed's hold on rates.
Re: To what degree can the Fed control interest rates?
Posted: Thu May 19, 2011 2:20 pm
by MediumTex
Short term interest rates, yes.
Long term interest rates, no.
Ben Bernanke wrote on this topic earlier in his career and suggested that a central bank could experiment with attempts to control the longer end of the yield curve, but even he wasn't certain it could be done by a central bank.
Re: To what degree can the Fed control interest rates?
Posted: Thu May 19, 2011 2:24 pm
by moda0306
MT,
To what degree can the fed keep ST rates below inflation, in your opinion?
Re: To what degree can the Fed control interest rates?
Posted: Thu May 19, 2011 2:35 pm
by MediumTex
moda0306 wrote:
MT,
To what degree can the fed keep ST rates below inflation, in your opinion?
It depends on how much they want to spend.
It appears they are doing it as we speak, since most would agree that there is more than 0% inflation right now.