Kroll Bond Rating Agency Releases Research Report on Future U.S. Interest Rates and Inflation

Kroll Bond Rating Agency released a research report today on future U.S. interest rates and inflation. The meetings last month at the Federal Reserve Bank of Kansas City’s Jackson Hole Conference carried little in the way of surprises. Federal Reserve Board Chairman, Janet Yellen, focused on conditions in the labor market and how they might or might not be changing. This suggests to Kroll Bond Rating Agency (KBRA) that the Fed’s ability to impact the performance of the U.S. economy is limited. More importantly, there does not appear to be any acknowledgement on the part of Yellen or her colleagues on the Federal Open Market Committee that the extreme low interest rate policies followed by the Fed since 2008 may be creating risks to the global economy in the financial markets.

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.

Follow us on Twitter!
@KrollBondRating

About Kroll Bond Rating Agency

KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).