Numerical Value of the macro statistic you will discuss.
The Fed is keeping the short-term interest Rate at 1%. This was announced Tuesday, October 28th. .
B. What explanations are being given for the specific numerical value of the statistic? (How do the experts explain the statistic?).
The Federal Reserve acknowledges that the U.S. economy is improving but they are making no efforts to raise interest rates at this time. This interest rate is the lowest level in 45 years and the Fed suggests that it would continue to be low until at least sometime next year. Analysts explain that the Fed kept the interest rates low because "the gap between the economy's actual performance and its potential is so large that short-term interest rates should be extremely low," and after time it will take up the slack in the economy. This gap measures unused labor and production capacity and means that the economy can potentially grow quickly without generating inflation and short-tem interest rates will be low for a considerable period.
Some analyst expected the committee to be more positive of the economic outlook and because of the recent improvement in labor market, some argue that the outlook is strong enough for the rates to go up. Some economist warned that the Fed is waiting too long. .
Chief U.S. economist, Ian Shepherdson, said, "Just today, we learned that durable orders, excluding transportation equipment, rose faster in the third quarter than at any time in the 1990s boom. This is not consistent with a rate a 1% indefinitely." .
Also, Alan Greenspan wanted a more concrete answer that unemployment is about to decline below its current level of 6.1% and that consumer prices will not fall into a downward spiral of deflation. The main question that economists have is how the Fed will signal a shift in policy. .
C. What does this statistic suggest about the strength of the economy over the next 6-12 months?.
