World Report Now

Breaking News

Tuesday, April 20, 2021
Log in
  • Headlines
  • U.S.
  • World
  • Business
  • Entertainment
  • Sports
  • Sci-Tech
  • About/Contact
  • Staff
  • Latest News
    • 7-Year-Old Dead Body Found in a Chimney
    • Is Watching Porn a Healthy Habit
    • The Only Poisonous Snake Species in Michigan Protected by Law
    • Largest Penis Record Holder Refuses Penile Reduction Surgery
    • 2016’s Funniest Passwords
    • Stop Rage Quitting and Take It like a Man
    • Miracle Cure For Autism is Dangerous
    • Best PC Games to Play with An Xbox 360 Controller
    • Gene Responsible for Gray Hair Was Discovered
    • Diabulimia Is a Dangerous New Threat for Diabetic People
    • Google Launches ‘Feeling Woof’ and ‘Feeling Meow’ Apps as Part of April Fool’s
    • Facebook and Instagram Servers Went Down, Leaving Users Confused
    • Hero Golden Retriever Saves Owner from Blizzard
    • UAE Astronomers Want to Grow Crops on Mars
    • Starbucks Shares Plummet as U.S. Membership Growth Turns Backwards

Pages

  • About/Contact
  • Privacy Policy GDPR
  • Staff
  • Terms and Conditions

Recent Posts

  • Rivers on Earth Occupy a Much Bigger Surface than Researchers Thought (Study) June 29, 2018
  • Seeing the Same Doctor Might Make You Live Longer (Study) June 29, 2018
  • Researchers Reveal the Secret Behind the Domestication Process of Dogs June 28, 2018
  • Stars Are Separated by Toxic Space Grease Made of Carbon (Study) June 28, 2018
  • Instagram Welcomes Video Chat, Topic Channels, and New Photo Filters June 27, 2018
  • South Korean Judges Sentence an Overwatch Hacker to One Year in Prison June 26, 2018
  • Plus Size Normalization Increases the Obesity Problem (Study) June 25, 2018
Home » Business » Discount Rate Hike Called for by Three Federal Banks

Discount Rate Hike Called for by Three Federal Banks

January 14, 2015 by Renee Randazzo Leave a Comment

Central BankThree regional Federal Reserve Banks from Kansas, Dallas, and Philadelphia continue to encourage the central bank to increase rates being charged to commercial banks specifically for emergency loans.

Prior to the policy meeting held December 16 and 17, directors of the three banks made a request to the Board to boost the discount rate from 0.75% to 1%. However, the decision not to raise rates favored the other regional Federal Reserve Banks that have pushed to keep the rate as it is.

A number of economists anticipate that rates will begin to increase during the middle of the year but because there have been some developments in critical financial markets, the Federal Reserve Bank may choose to wait.

As indicated by Mark MacQueen, Sage Advisory Services’ portfolio manager, in looking at the market, it appears the Federal Reserve will not increase the rate as early as some believe. In fact, specific to the Federal funds futures market, a rate increase may not happen until sometime in September.

In a statement from Cheng Chen, US rates strategist with TD Securities, short positions value for the Eurodollar futures market dropped 86% to $14.5 billion for week-ended January 6. What makes this so important is that short Eurodollar futures are used by investors to hedge increasing interest rates so when short positions drop, it shows that a large number of investors do not expect a hike in rates anytime soon.

Measuring the annual inflation level expected by investors from 2020 to 2025 is the five-year forward five-year break-even rate, which declined to 1.86%, the lowest reported dating back to December of 2000.

In the meantime, the hike request made by the three regional Federal Reserve Banks would normalize the spread between the overnight Federal funds rate and discount rate for lending to banks. Of all economic levers, this is the main one for the central bank, which has remained locked in to a range of 0% to 0.25% for years. Before the most recent financial crisis, this spread was at 1% but to facilitate liquidation, it was cut by the Federal Reserve Bank.

The directors of all 12 regional Federal Reserve Banks feel there is improvement with the US economy although several of them also believe there would be wage pressures coming, primarily for jobs whereby workers must possess specialized skills.

Overall, the directors were more confident about growth in the economy for the future but there were still some who noted weakness overseas as being a possible risk to the economy in the US.

Some experts feel the central bank is moving too slow to increase rates, as well as reverse certain elements of the easing program. One economist stated that the Federal Reserve Bank is going down a well-known and dangerous path, adding that the bank is in denial about mistakes made in the past and taking the same approach that led to the financial crisis. As such, consequences could be just as bad as they were in 2008 and 2009.

Filed Under: Business Tagged With: central bank, economy, emergency loans, Federal Reserve, financial crisis, hike, increase, interest rate

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Left brain hemisphere made of circuits next to a right brain hemisphere made of paintbrush lines

Norman the Psychopath AI Shows Us the Dangers of Artificial Intelligence

June 7, 2018 By Henry Williams Leave a Comment

atom illustration

New Study Analyzes Unique State of Matter, an Atom Full of Atoms (Study)

February 27, 2018 By Renee Randazzo Leave a Comment

sunflares on the surface of the sun

The Sun Expected to Get Dimmer and Cooler, According to New Study (Study)

February 13, 2018 By Renee Randazzo Leave a Comment

expedition 54 crew members

Three New Astronauts Join ISS Crew

December 21, 2017 By Renee Randazzo Leave a Comment

Person scrolling on a smartphone

Austrian Designer Challenges Smartphone Addiction by Creating a Substitute Phone for You to Scroll On

November 28, 2017 By Henry Williams Leave a Comment

Molecules of E. coli bacteria

Researchers Created the First Tape Recorder Bacteria by Using the CRISPR Techique

November 25, 2017 By Peggy Schmidt Leave a Comment

Interview at Web Summit held in front of the event's colored panel

Tech Experts Propose Artificial Enhancement of the Brain During This Year’s Web Summit

November 11, 2017 By Henry Williams Leave a Comment

Bright elliptical galaxy

Researchers Spot Distant Galaxy Almost as Old as the Big Bang (Study)

November 9, 2017 By Peggy Schmidt Leave a Comment

Offshore wind turbines of a wind farm

An Ocean Wind Farm Might Offer an Unlimited Energy Supply

October 11, 2017 By Renee Randazzo Leave a Comment

turbines used in wind energy submerged in water

Underwater Turbines Produce Electricity By Using the Power of the Waves

September 25, 2017 By Renee Randazzo Leave a Comment

overwatch screenshot

Next Free Weekend on Overwatch Starts Sept 22, Yet Updates Are Still Slow

September 17, 2017 By Peggy Schmidt Leave a Comment

children in classroom

Scientists Concluded that Later School Time Could Improve U.S. National Economy

September 5, 2017 By Renee Randazzo Leave a Comment

mark zuckerberg

Facebook Is Determined to Launch Flagship Video Chat Hardware in May 2018

August 25, 2017 By Dawn Saunders Leave a Comment

agents of mayhem poster

Agents of Mayhem Is a Refreshing Video Game from the Saints Row Universe

August 17, 2017 By Renee Randazzo Leave a Comment

Categories

  • Business
  • Education
  • Entertainment
  • Headlines
  • Health
  • Nature
  • Sci-Tech
  • Science
  • Sports
  • Technology
  • U.S.
  • Uncategorized
  • World

Copyright © 2021 · Genesis Framework · WordPress · Log in