One Fed Banker Thinks Interest Rates Should Be Negative Until 2017

• The much-anticipated FOMC meeting is finally over, and the Federal Reserve has decided to keep interest rated untouched – at record lows.
• The Fed cited a few reasons behind this decision, including the sluggishness in the global economy and the low inflation in the U.S.
• Interestingly enough, one Fed member believes interest rates should remain in negative territory until 2017.

According to a press release issued right after the meeting, "Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term."

In addition, the Fed mentioned the further improvement seen in the housing sector and labor market, noting that, “labor market indicators show that underutilization of labor resources has diminished since early this year.”

After the announcement, all of the main market indexes (the S&P 500, the Dow Jones, the Nasdaq) rose, while Treasury bonds fell.

The One Fed Banker Who Thinks Rates Should Be Negative

A look at the “Economic projections of Federal Reserve Board members and Federal Reserve Bank presidents under their individual assessments of projected appropriate monetary policy” released on Thursday reveals that on of the Fed members believes interest rates should remain in negative territory over 2015 and 2016.

In a chart titled Appropriate pace of policy firming, it should be noted that one of the officials lowered his/her forecast – when compared to the June projection. Below are both charts.

June

Source: Federal Reserve

September

Source: Federal Reserve