Normally longevity is good thing. Everyone wants to live a long life, right? Of course.
Another meeting at the Fed yields more of the same – nothing. Despite economic growth, the Fed is sticking to its stimulus program of low rates because of international economic uncertainty (i.e., China’s slowing growth) and falling commodities prices.
At least we get new reasons (excuses?) for the inaction, right? However, the bottom line remains that the federal funds rate is the same it’s been since 2008.
In essence, the Fed is acknowledging that its economic growth policy approach is a failure. To me, citing international concerns is a sign of uncertainty, as if there are no tools left in the toolbox.
Even a modest bump in the rate would’ve helped. It would’ve signaled that the Fed believes the growth we’re experiencing is sustainable. It also would’ve gone some way towards fixing the ills caused by cheap credit. Instead, the rate stays stagnant. All this nothing continues to make us obsess over the Fed and when (not if) rates will go up.
The institution is becoming the epicenter of inconclusiveness and eroding its credibility. How long will the stock market continue to embrace this? The economy is changed, it’s time for the Fed to raise rates and let it normalize.