One of the clear messages from Jackson Hole and the most recent FOMC minutes is that there is a growing discussion about normalizing interest rate policy, yet it is also clear that the majority on the FOMC continue to favor the current low-rate policy. While some of the more bullish economists who see U.S. GDP growth exceeding 3% in 2014 make the case for increasing interest rates immediately, KBRA believes that the FOMC’s ability and willingness to increase interest rates is limited by a) the continued dysfunction in the short-term money markets and b) the still modest demand for credit in some key sectors such as housing.
To view the report, please visit https://www.krollbondratings.com/show_report/1463.
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