Never underestimate the myopia of the men and women who dictate the debate over United States monetary policy. Case in point: Federal Reserve chair Janet Yellen, at a press conference in Washington Wednesday, answered nine questions about the U.S. economy before anyone asked her about Greece.
The current fixation of the U.S. financial press currently is when the Fed will lift its benchmark interest rate. That’s partly a function of the way the news business works. The U.S. central bank hasn’t raised the federal funds rate since 2006. Therefore, the eventual increase will be an event—the same way wins by the Edmonton Oilers or the Toronto Maple Leafs became occasions this season.
But the fans of those teams knew scattered, late-season upsets did nothing to change the glum story of the 2014-15 season overall. Same with the Fed. The real story is the trajectory of borrowing costs in the months and years ahead—not whether the Fed will raise interest rates in September, December or March. “Sometimes too much emphasis is put on the timing,” Yellen said in response to the first question she received Wednesday.
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