As Federal Reserve policy makers consider raising short term interest rates for the first time in nearly a decade, three Central Bank policy experts believe the economy and markets should be ready for a hike. But whether or not the Fed raises will be a close call, and what happens next year is an open question, according to three fellows at the Peterson Institute of International Economics in Washington D.C. ‘I think it will be very important that the Fed keep an eye and not go too fast next year. But I think it’s time to start,’ said Joseph Gagnon, senior fellow at the Institute. ‘I’m going to take the dovish side of the argument and say I don’t think the economy is ready,’ said Pedro da Costa, editorial fellow at the Institute. ‘The Fed has always argued that raising interest rates would be a sign of confidence in the economy. I don’t think the Fed has really made the case for why they need to go at the moment,’ he added. ‘I think the economy is ready, it’s just inflation that is low,’ said Angel Ubide, a senior fellow at the Institute. ‘So in some sense for me, the Fed has the luxury when to choose to start raising rates.’ TheStreet’s Rhonda Schaffler reports from Washington D.C.
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