“I think it needs to go up at some point in time, whether it happens now or later,” Walter Yohe, a loan originator with Residential Home Funding Corp. told MPA. “Keeping it low for another year will help more people qualify; rates haven’t been this good since the ‘60s.”
The IMF agrees.
On Tuesday, it urged the Federal Reserve to maintain its benchmark rate at 0.25 percent in 2016, citing flagging inflation that is trending below the two percent target.
“Right now, we see inflation indicators actually declining in the U.S.,” Nigel Chalk, the IMF’s U.S. mission chief said, according to the Wall Street Journal. “They’re still relatively far from the Fed’s medium-term goal of two percent … so we feel that there’s some space for them to wait and see some more wage and price inflation before moving.”
The benchmark rate has remained unchanged since the 2008 financial crisis, and was most recently held at its current 0.25 percent rate at last month’s rate announcement.
“To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate,” the Fed said in its official monetary policy report, released in mid-June. “In determining how long to maintain this target range, the Committee will assess progress--both realized and expected--toward its objectives of maximum employment and 2 percent inflation.”
Still, despite the IMF’s call, only two out of 17 FED officials said at the last meeting that they want to wait until 2016 to implement a rate increase.
The IMF is calling on the Federal Reserve to delay its inevitable rate hike until 2016, echoing the advice of originators across the US.