Economía marxista para el Siglo XXI

Michael Roberts Blog

So the Fed finally bit the bullet and decided to hike its policy rate from 0.25% to 0.50%.  It also suggested that it would continue to raise its rate by another 1% point in 2016 and further 1% point in 2017 to reach 3.5% by the end of the decade.

The Fed’s policy rate sets the floor for all borrowing rates in the US economy and further afield for credit in dollars for many economies.  So this is an important policy move.  It would appear that the era of cheap money, QE and ‘unconventional’ monetary policy is over – at least for the US.  The Fed now expects US annual inflation to rise from near zero now to 2% (on its measure of consumer spending) by 2019.  That means real interest rates (after deducting inflation) will rise from zero to 1.5%, if these projections hold.  That’s clearly a tighter money…

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