US Fed will show its true colours only after next rate increase

While policymakers believe that the US economy is in good health, Federal Reserve Chairwoman Janet Yellen is still edgy (photo: dpa)
While policymakers believe that the US economy is in good health, Federal Reserve Chairwoman Janet Yellen is still edgy (photo: dpa)

The US Federal Reserve Board has finally made up its mind and will probably tighten monetary policy in the United States before the end of 2015. Will this be real monetary tightening or just a gradual retreat from the previous easy credit approach?

This report argues that the Fed still has too much faith in Keynesian theorising and too many doubts about the strength of the American economy. Interest rates are likely to rise very gradually, in order not to wreak havoc in such delicate areas as private investments and banking. This cautious approach is more or less what financial markets have been anticipating.

If these expectations are confirmed, US Federal R...

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