Capital Economics economist Paul Ashworth
- Says the Federal Reserve should have already raised rates, based on Taylor rule and research suggesting equilibrium rate is still 1%
He goes on to say (bolding mine), on hints from Janet Yellen that the equilibrium rate might be as low as zero:
- "Not only would we dispute Yellen's apparent assertion that the equilibrium real rate is now as low as zero, we're skeptical of the FOMC's unemployment and inflation projections too"
- "We think the former will fall more rapidly while the latter will rebound sooner"
Capital Economics have an aggressive view on rates ... they see Fed Funds rate of more than 2.5% at end of 2016
I thought the Taylor Rule was 'Shake It Off'?
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ps. The FOMC is 'data dependent'. They've told us that a million times already (or something like that, I haven't kept count).
What the FOMC want to see is "further improvement in the labor market," and to be "reasonably confident that inflation will move back to its 2 percent objective."
I reckon Q2 data is going to be much improved over Q1 now that the weather has turned. MUCH better. And so, I reckon a hike is coming ... June looks too early, but September? Sure.
