According to meeting minutes from January, Federal Reserve officials have been debating raising interest rates. These minutes, released to the public Wednesday, have sparked concern, since the Fed has kept interest rates close to zero since the end of the financial crisis in 2008. The minutes disclosed that some officials want to increase the federal fund rates soon.
The Fed had previously suggested that any rise in interest rates would be linked to the unemployment rate falling below 6.5%. Last month, unemployment was at 6.6%. Proponents of raising the federal fund rates argue that this is very close, and it is time to increase rates now that the economy is doing so much better. However, although this is quite close, others argue that there are still major problems in the job market.
Some officials might be ready to make the change, but don’t fret. Any increase is unlikely in the short term. It seems that the majority of policymakers know that consumers still need some time to get back on track. They argue that it would not be appropriate to raise short-term rates until 2015 or later. Some even argued that standard policy tools should not apply, because consumers still feel the impact of the recession.
So, it looks like consumers are safe for now. But expect higher interest rates come 2015.