If the economy is doing so well and is continuing to grow, why does the Federal Reserve Board say there is less likelihood of a rate hike to tame a too-rapid growth rate?
Historically, the Fed has boosted interest rates to prevent the economy from overheating, and then suffering a rapid cooling -- not to say recession.
But after several months of raising interest rates to implement that policy, the Fed now says the economy is doing well enough on its own so no cooling-off measures -- much less stimulation -- are needed.
Unless, of course, Fed analysts know something the rest of us don't know, and that might be that the economy is about to hit the metaphorical skids and slip aside. If that happens, the Fed can then return to its strategy of lowering interest rates to enable the economy to recover.
"The case for raising rates has decreased somewhat," said Fed Chairman Jerome Powell at a news conference. However, he added that while the agency expects the economy to continue to grow "at a solid pace," there are some signs of weakness and a slowdown in other parts of the world, which give the Fed "reason for caution."
In other words, we're doing okay, but there may be trouble ahead.
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