Why Raise Rates?

By Bill Tatro

Inflation, whether determined by core, headline, or the feds' own internal measurement, is not approaching the cyclonic days of yesteryear. As a matter of fact, the world in general, and the U.S. in particular, cannot even get the rate to a paltry 2%. That's paltry by the '70's standards. Mortgage origination is at all-time lows. Oil has dropped 55% in 6 months. The housing market's post '08 bubble now seems to have sprung a leak. The only jobs being offered are minimum wage. Mainstream media says rates will rise by mid-summer. The economic gang of 68 (those who unanimously predicted 4% 10-year treasuries by the end of 2014) say increases could be sooner. Even the fed heads are saying "lackluster inflation won't prevent a rate hike." So, why raise rates? [more...]