The big question is: When will the term structure of interest rates change? That's the question to be worried about.
Sentiment: NEGATIVE
Should that worse scenario materialize, then most probably our propensity to increase interest rates will be weaker.
It would be helpful if someone would lay out exactly the economic mechanism that gets us from yet lower interest rates to actual economic activity.
Right now we think that rates will stay low, that you'll be able to get a mortgage below seven percent and that's kicked off a refinance boom that's going to put more money in the pockets of consumers.
Right now the long-term investors are telling us that they're not as concerned about inflation and so we're seeing these rates now move into the marketplace and out to the street - rates that individuals can get.
Obviously, there has to be a profound change in direction. Otherwise, interest on the national debt will start eating up virtually every penny that we have.
Interest rates are used to achieve overall economic stability.
The problem with interest rates are that you are not modeling a single number, you are modeling a whole term structure, so it is a sort of different type of problem.
We believe that the Federal Reserve has to carry on with a progressive increase in interest rates as a consequence of the American economy.
Monetary policy is like juggling six balls... it is not 'interest rate up, interest rate down.' There is the exchange rate, there are long term yields, there are short term yields, there is credit growth.
It's appropriate for the Fed to gradually and cautiously increase our overnight interest rate over time.