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Interest Rates and Fed Watching - The Side Stories
Dan Dunn
posted Sep 15, 2015
Finance News

I think the main story of the interest rate increase decision is kinda boring at this point. But there are some side stories that I think are still fascinating.

1) Fortune has a sort of human interest story about the Fed. It's been so long since the Fed raised rates - that almost no one on the governing board has ever voted to increase rates before! It's a whole new thing for them.

2) The meatier story is from the New York Times. The mechanism that the Fed has used to control interest rates is no longer effective. There is so much cash in the system that Fed can't just tighten the reserve policy to raise interest rates. It's building a whole new system to borrow the money from the banks and soak it out that way.

This is all just inside baseball compared to the "real" story of the impact of the overall monetary policy. But I confess I'm going to be just as interested in the implementation details as the big picture.

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1 response
Simon Thornington
Sep 15, 2015

They've been testing the operational details of the reverse-repos for a few years now, and LIBOR is already on the way up, it seems, so it might not be so hard as all that.

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The material on this website is provided for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation or endorsement for any security or strategy, nor does it constitute an offer to provide investment advisory services by Quantopian.

In addition, the material offers no opinion with respect to the suitability of any security or specific investment. No information contained herein should be regarded as a suggestion to engage in or refrain from any investment-related course of action as none of Quantopian nor any of its affiliates is undertaking to provide investment advice, act as an adviser to any plan or entity subject to the Employee Retirement Income Security Act of 1974, as amended, individual retirement account or individual retirement annuity, or give advice in a fiduciary capacity with respect to the materials presented herein. If you are an individual retirement or other investor, contact your financial advisor or other fiduciary unrelated to Quantopian about whether any given investment idea, strategy, product or service described herein may be appropriate for your circumstances. All investments involve risk, including loss of principal. Quantopian makes no guarantees as to the accuracy or completeness of the views expressed in the website. The views are subject to change, and may have become unreliable for various reasons, including changes in market conditions or economic circumstances.