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The Road To Higher Rates: Fed Starts Debating When To End Reinvestments Of Maturing Debt

Wednesday, April 20, 2011 - 6:41 AM
From Bloomberg:
Federal Reserve Chairman Ben S. Bernanke may keep reinvesting maturing debt into Treasuries to maintain record stimulus even after making good on a pledge to complete $600 billion in bond purchases by the end of June.

In CR's timeline for Fed rate hikes, the end of reinvestments was predicted as the second event on the road to higher rates after ending QE2. The article mentioned that the majority of polled economists predicted it'll take the Fed between 4 and 6 months for the end of reinvestments after the end of QE2.

After the end of reinvestments, the Fed will eventually change its "extended period" language in its FOMC statements. And then some time after that, we'll see rate hikes.

In short, CR predicted a rate hike no sooner than early 2012. I'm afraid nothing has changed yet that would move that sooner.
4
Ken TuminKen Tumin5,469 posts since
Nov 29, 2009
Rep Points: 125,249
1. Wednesday, April 20, 2011 - 7:00 AM
Bernanke will have to be dragged, kicking and screaming, before he opts for a rate hike. Taking the punch bowl away from his friends at Goldman Sachs and JPMorgan will be quite a ways away.
3
ShorebreakShorebreak2,625 posts since
Apr 6, 2010
Rep Points: 14,226
2. Wednesday, April 20, 2011 - 11:28 AM
It sure seems that these years of low interest haven't really done anyone much good.  I'm a saver wanting a higher interest on my money and I have cut back spending alot the past few years because of my low paying cd's.
2
diamondxdiamondx72 posts since
Jan 19, 2011
Rep Points: 170
3. Wednesday, April 20, 2011 - 11:28 AM
It sure seems that these years of low interest haven't really done anyone much good.  I'm a saver wanting a higher interest on my money and I have cut back spending alot the past few years because of my low paying cd's.
2
diamondxdiamondx72 posts since
Jan 19, 2011
Rep Points: 170
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