Federal Reserve will End Quantitative Easing, but when will Rates Rise

BBC Bussiness

The Federal Reserve has made a statement that interest rates will raise after the Stimulus program ends in October, which should mean that short term rates should rise, this is not the case. Janet Yellen has said there is no set calendar date for rate raise. The Short term interest rates have been at 0% since 2008. This statement has led to two members of the making committee to walk out.  Many investors are watching and waiting for when the Fed will increase the interstate rate

The Fed has repeated itself in a new mess. With its always consistent and mind- boggling statement, “When economic conditions and the economic outlook warrant a less accommodating monetary policy, the Committee will raise its target range for the federal funds rate," The fed have repeat this statement multiply times. A member of the board walkout t of the stated that if the Fed continues on this path it runs the risk of faster rises in prices. This has led investors to simply scratch their heads and wonder.

Basically what is happening in this article is that the Federal Reserve has promise to raise its short-term loan rates, but only of the data shows that the economy haves improved. One of the factors that determine this is inflation. Inflation Last month (August 2014) is currently at 1.7% annually. This is below what the Fed’s target rate. 

Federal Reserve Cuts Monthly Assets Purchases

Forbes Article 

March 19th 2014 Federal Reserve has again shrunk down another 10 billion. This is the third time that the Federal Reserve has done this. In her first open market meeting as the head of the Federal Reserve Janet Yellen has stuck to her promise of continuity, cutting the central banks purchases of assets. The money that the Federal Reserve is called Quantitative Easing   The reason behind the shrinking of the amount of money that is flowing out of the Reserve is the economy is showing signs of improvement. 

The whole idea of allowing the government paying up of assets was to help stimulate the Post- Recession economy. The practice is called Quantitative Easing, it’s when the government pumps money into the economy to keep interest rates low and allow for growth. The Fed in December of 2013 purchased 85 billion in bonds to help support low interest Rates.

This idea of Quantitative Easing is to help improve the economy. After the 2008 financial crises, many feel that the Fed hasn’t done enough to help with the recovery. With Yellen cutting the amount of money pumped into the economy she hopes to raise interest rates and make the final push to recover from 2008 financial crises.