Financial markets are in a tizzy as to whether the Federal Reserve will begin lifting interest rates in September or December, but the exact date isn't of great consequence, says former Fed Vice Chairman Alan Blinder.
"Unless you are a bond trader betting on the outcome . . . [it] doesn’t matter much," the Princeton University economist
writes in The Wall Street Journal.
The Fed has kept its federal funds rate target at a record low of zero to 0.25 percent since December 2008.
The choice means little for the economy, Blinder says. "[Its] performance in 2016 and 2017 will hardly differ depending on whether interest rates start rising in September or December."
So what does matter?
"The path of interest rates after liftoff," Blinder argues. That determines how much of a boost the economy will receive.
"Here the question is: Will rates rise swiftly or slowly in 2016? And the answer is clear: slowly," he says.
The economy grew 2.3 percent in the second quarter, and many economists expect a similar rate for the rest of the year.
Meanwhile, Steve Forbes, editor-in-chief of Forbes Media, tells Newsmax TV that Fed should move quickly.
"When the Fed allows rates to rise you're going to see the beginnings of the credit markets in this country working again,"
Forbes told Newsmax TV's "The Hard Line" program.
"Small and new businesses are having a very difficult time with regulations, which make bank loans very expensive for small businesses."
Thus these companies aren't receiving much in the way of loans, especially from community banks, which are "getting crushed by regulations," Forbes said.
"What you have is a situation where . . . big companies are doing well, the government is doing well in terms of borrowing. But the people who are the innovators, the job creators, which come from small businesses, they're suffering in this environment."
So rising rates can help job creators, Forbes maintains.
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