Why the Fed Has Time on Its Side

摘要

When policymakers meet at the end of this month, the Federal Reserve will have gone a year without moving interest rates. The longest the Fed under Chairman Alan Greenspan has gone without a shift in rates, either up or down, is 18 months. And after the extremely disappointing jobs report, along with no signs of inflation, economists are wondering if the Fed will break its record. Indeed, a strong case can be made that the Fed might not raise rates until 2005. Such thinking was unconventional wisdom a few months ago. The economy was roaring, with real gross domestic product surging at an annual rate of 8.2% in the third quarter, and job growth seemed on track to add about 100,000 per month in the fourth quarter. Plus, many Fed officials began to make the case that "accommodative" policy doesn't mean the federal funds rate has to stay at 1%.