IMF urges US Federal Reserve to be cautious in hiking rates | Business News

IMF urges US Federal Reserve to be cautious in hiking rates

31 Oct 2015 | Author: | No comments yet »

In GOP Debate, Ted Cruz and Rand Paul Tear at Fundamentals of the Fed.

A busy week ahead on the economic calendar highlighted by the October jobs report and a handful of speeches by influential members of the Federal Reserve. Rand Paul of Kentucky criticized the Fed’s impact on the economy and called for new operating regimes that would limit the central bank’s influence.

The two senators have long opposed how the Fed operates, and were asked by CNBC’s Rick Santelli about their views of the central bank during the debate held by the television channel. Flatlining wages have helped keep inflation well below the Fed’s 2% target rate despite mostly healthy job creation and a rapidly falling headline unemployment rate.

Meanwhile, investors will be following every word uttered by Fed policy makers as they explain their decision this week to keep interest rates at their near-zero levels at least until December. Cruz also said the Fed has an inflation problem on its hands. “If you look at a single mom buying groceries, she sees hamburger prices have gone up nearly 40%. New York Fed President William Dudley and Chicago Fed President Charles Evans speak on Monday; Fed Chair Janet Yellen speaks on Wednesday; Fed Vice Chair Stanley Fischer and Minneapolis Fed President Narayana Kocherlakota speak on Friday. Other significant economic reports out next week include: personal income and outlays on Monday; S&P Case-Shiller Housing Price Index on Tuesday; October motor vehicle sales and the ISM Manufacturing index on Thursday.

And loose money is one of the major problems,” he said. “I think the Fed should get out of the business of trying to juice our economy and simply be focused on sound money and monetary stability, ideally tied to gold,” Mr. Fed officials have acknowledged that, across the economy, individual prices can be volatile, with central-bank policies targeting the overall rate inflation. At the same time, the dollar has been resilient and its current strength relative to other major currencies is seen as a factor sapping growth by making American exports more expensive.

And when it comes to tying the dollar to gold, many economists agree that a precious-metal standard has in the past led to more economic problems than its solved. He also made a plug for legislation that would audit the monetary-policy-making functions of the Fed, something central bankers and many economists believe would politicize rate policy and make it less effective.

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