By Isaac Cohen*
The most advertised US monetary policy decision is now better described in rocket launching terms. For instance, one week before the meeting, when it is expected the central bank will increase interest rates, we find ourselves in the countdown phase, while the decision, when it comes, will be described as “lift-off.”
Several indicators have persuaded almost every observer that next week, on Wednesday 16 finally, interest rates will be increased by the Federal Reserve Open Market Committee. Most recent indicators of economic activity, point to a sustained pace of economic reactivation. The last Labor Department report, of 211,000 new jobs created in November and the unemployment rate unchanged at 5 percent, confirmed the average rate of monthly job creation of 234,000 of the last two years. Also, certain transitory factors, such as low gasoline prices and a strong dollar, have pushed inflation below the target of 2 percent, expected by the central bank. Additionally, economic growth in the third quarter was revised upward to 2.1 percent, by the Commerce Department, revealing the persistence of a moderate pace of expansion.
Finally, in her last testimony to the US Congress, presented last week, the Federal Reserve Chairperson Janet Yellen closed saying the start of monetary policy normalization, should be seen as a “testament” to how far the US economy has recovered from the Great Recession.
*International analyst and consultant. Commentator on economic and financial issues for CNN en Español TV and radio. Former Director, UNECLAC.