US Interest Rates
The U.S. central bank began raising interest rates Dec. 16 from record lows, as it hiked its benchmark rate by a quarter of a percentage point. (Source: )
, Department of Economics
鈥淚ncreases in the policy interest rate in the United States will reflect the data showing that the U.S.
Economy is really strengthening, after years of a sluggish recovery.
Such strengthening will be good for Canadian export-producing industries, and good for Canada.鈥� 鈥擟hris Ragan
Christopher Ragan is an associate professor of economics at 91社区 and a research fellow at the C.D. Howe Institute.
christopher.ragan [at] mcgill.ca (English) Cellphone available upon request, vincent.allaire [at] mcgill.ca
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, Department of Economics
"The Fed interest rate, ever since the dangerous and inflationary strategy of "quantitative easing" was adopted, has little to no real connection with credit markets.
Since 2008, despite the "official" interest rate of near zero was initiated, credit has not been easy to get for most small to medium sized firms.
Loanable funds, which in the past was the target of central bank interest rates, is no longer readily available, since banks all over the G7 are sitting on excess reserves, and are afraid to advance loans into the dangerous markets they believe to exist.
The only way new lending will be profitable for creditors is for general economic health to return to markets鈥攕omething policy makers, especially in the USA, have been unable to bring about.
The tepid recovery now underway in the USA has gone on long enough for some small increase in investment activity to occur, and that will be good for Canada." 鈥擳om Velk
TomVelk [at] aol.com (English). Cellphone available upon request, vincent.allaire [at] mcgill.ca
