The Fed isn't seeing any inflation, so it's not seeing a reason to raise rates.
But you're right that it doesn't give them much monetary room--I guess if/when the downturn comes resorting to fiscal stimulus be the only answer. Not that the GOP deficit chickenhawks have given any room there: remember when GOP was against deficits? US$ 1T later Pepperidge Farms remembers.
I'm an economic idiot, but the interest rates have started concern me. It's seemed like no one wants to cut them as that might put the brakes on "growth". There are also rumorings of a crash being around the corner. So if a crash does come about, what's the Fed going to do seeing as how rates are already bottomed out?
> It's seemed like no one wants to cut them as that might put the brakes on "growth".
I assume you meant “raise” instead of “cut” here.
If so, you are correct, and the question about what the fed does when the market corrects/crashes is why a lot of folks are wringing their hands right now.
Inflation remains low? Seriously, I have no idea how they are computing that rate when asparagus is $4.99/pound these days. It seems like low rates feed the housing bubble nicely, and if housing costs were more adequately represented in the CPI, it would be much higher.
Housing costs are reflected in CPI, as imputed rent. I couldn't find the exact weights with a quick search, but IIRC housing costs are around a quarter of the basket. Asparagus is less than that.
