- Interest rates in the U.S. have been rising at a slow to moderate pace
- The Fed is likely focused on restricting money supply, not on a specific interest rate
- The tightening will probably come to an end in mid-2019
- If U.S. debt remains high, the dollar will continue to appreciate
Despite considerable clamor calling for a stop – and a reverse – to expansionary monetary policy, during the past year new United States Federal Reserve Board Chairman Jerome Powell has proceeded rather cautiously.
For example, since the beginning of this year until mid-December, the federal funds rate – the short-term annual rate of interest controlled by the Fed – rose from 1.42 percent to 2.25 percent. A rough measure of how long-term interest rates have moved is the yield on the 10-year U.S. Treasury bonds, which during the same period has progressed from 2.45 percent to 2.85 percent. At the same time, the annualized rate of inflation in October was 2.5 percent, up from the 2.1 percent figure registered in January.