08 May 2016

Dean Baker: The Fed's Urge to Raise Interest Rates

The Federal Reserve Board's Open Market Committee (FOMC) decided not to raise interest rates at its meeting last week. However, the FOMC also made clear that a rate hike was still an option for its June meeting.

The decision to put off a rate hike is good news, but the real question is why the Fed is even considering a rate hike. Just to remind everyone, the point of raising interest rates is to slow the economy. Higher interest rates discourage home buying, investment and act in other ways to slow the economy.


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