Low Rates Forever

This week Fed Chair Janet Yellen did not surprise anyone as she pointed out the disappointing readings on housing activity and its potential risk to the Fed’s baseline economic outlook. She also maintained that it would be a “considerable time” after ending QE before the Fed would begin to raise rates or start the process of normalizing its balance sheet, and that the Fed needs to see continued improvement in the jobs market to end QE in the fall and that the Fed’s aim was to maintain accommodative policy until they see labor market recovery.  I have never written anything more boring in my entire life. That means that the Fed plans to keep interest rates low through about mid-2015.  And that is exciting.