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Tue May 4, 2021, 05:33 PM

Treasury Secretary Yellen says rates may have to rise somewhat to keep economy from overheating

Source: CNBC

Treasury Secretary Janet Yellen conceded Tuesday that interest rates may have to rise to keep a lid on the burgeoning growth of the U.S. economy brought on in part by trillions of dollars in government stimulus spending.

“It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat,” Yellen said during an economic forum presented by The Atlantic. “Even though the additional spending is relatively small relative to the size of the economy, it could cause some very modest increases in interest rates.”

“But these are investments our economy needs to be competitive and to be productive. I think our economy will grow faster because of them,” she added.

Later in the day, she tempered her comments somewhat on the need for higher rates, saying she respects the Federal Reserve’s independence and was not trying to influence decision-making there. Yellen chaired the Fed from 2014-18. The Fed sets interest rates through its Federal Open Market Committee.

Read more: https://www.cnbc.com/2021/05/04/treasury-secretary-yellen-says-rates-may-have-to-rise-somewhat-to-keep-economy-from-overheating.html

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Reply Treasury Secretary Yellen says rates may have to rise somewhat to keep economy from overheating (Original post)
SouthBayDem May 4 OP
NoMoreRepugs May 4 #1
Yavin4 May 4 #5
WHITT May 4 #2
paleotn May 4 #3
Deminpenn May 5 #6
PSPS May 4 #4
twodogsbarking May 5 #7
Buckeyeblue May 5 #8

Response to SouthBayDem (Original post)

Tue May 4, 2021, 06:10 PM

1. During the 1990's Fed Fund rates ranged from

8 to a low of 3%. Since 2010 less than .1 (one tenth of one %) and a high of 2.5% or so according to the info provided by the Board of Governors of the Federal Reserve.

So I’m to understand possibly raising rates from the current .07% as of April’s numbers - 7 one-hundredths of one % is a cause for alarm???

If corporate America needs practically free money to be profitable we are all doomed.

Just an opinion...

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Response to NoMoreRepugs (Reply #1)

Tue May 4, 2021, 10:38 PM

5. There are people in corp. finance that have never seen interest rates above 2.5 for their entire

careers.

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Response to SouthBayDem (Original post)

Tue May 4, 2021, 06:39 PM

2. Both

Yellen and Powell on the record that rates COULD rise if required, but keep in mind both of them and the rest of the Fed have been trying to get inflation above 2.2% for YEARS, and are also on the record they would allow it to 'overshoot' for a period of time, if necessary. Lotta room.

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Response to SouthBayDem (Original post)

Tue May 4, 2021, 07:00 PM

3. From a savings standpoint, that's not a bad thing.

Fixed income return has been nonexistent since the great recession.

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Response to paleotn (Reply #3)

Wed May 5, 2021, 06:31 AM

6. Good point

nt

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Response to SouthBayDem (Original post)

Tue May 4, 2021, 10:36 PM

4. So what? The rate is currently zero precisely because there was no "heating" in the real economy.

As you may recall, there was even talk at one time about negative interest rates. Our current low interest rates are an indicator of a sick economy.

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Response to PSPS (Reply #4)

Wed May 5, 2021, 06:39 AM

7. Speaking the truth is unpopular.

But keep speaking it. I believe you are correct but as long as rates are near zero people keep plowing dollars in the stock market. Sounds planned.

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Response to SouthBayDem (Original post)

Wed May 5, 2021, 06:39 AM

8. Long term rates need to be looked at

I think low long term rates, therefore, low mortgage rates have lead to the spike in housing prices that we are seeing. It's crazy what some homes in my area are selling for. That's what worries me about our economy. Seems like we are lining up for 2008 redux.

Otherwise, gas is creeping back up. But I think that's more of a sign that demand his higher. Good for the economy, not so good for the environment.

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