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Fed Official Calls For Higher Interest Rates

Sunday, July 11, 2010 - 11:56 AM
From CBS News:
Thomas Hoenig, president of the Kansas City Federal Reserve, called for a gradual hike in interest rates and the rate at which the Fed lends money to private banks in an interview with CBS News Correspondent Rebecca Jarvis.

It should be noted that Hoenig is the only voting member on the FOMC with this opinion. He does make some good points in the interview:
"It's important to realize that zero percent was a rate that was necessary during the crisis, and I think it served its purpose," said Hoenig. "But now we have to think beyond that to a little longer term, and there are adverse effects, I think, from zero being carried."

The other camp thinks any rate hikes would put the economy back into recession. Hoenig isn't talking about huge rate hikes. Surely our economy can survive a fed funds rate at something like 1%. That was the fed funds rate bottom after the tech bubble burst.
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Ken TuminKen Tumin5,442 posts since
Nov 29, 2009
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