When Will The Fed Raise Interest Rates?

The Federal Reserve has to raise interest rates at some point, but nobody knows when. So in "When Will The Fed Raise Interest Rates?" I explain the Fed's dual mandate and look at the US labour market to see if we can estimate when the US will reach maximum employment and by doing so predict when interest rates may rise.

00:00 Introduction
00:49 What Does The Fed Say?
01:37 Why Would The Fed Raise Rates?
02:36 Mandate 1:Stable Prices
05:14 Mandate 2: Maximum Employment
06:22 Model
07:55 Forecast

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DISCLAIMER
All information is given for educational purposes and is not financial advice. Ramin does not provide recommendations and is not responsible for investment actions taken by viewers. Figures that are quoted refer to the past and past performance is not a reliable indicator of future results.

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[victief]

I think the FED will raise interest rates next year. This sentence will also be valid if you read it in 2022 or 2023.... ;-)

[HuNTeRDeLeVon]

Your video is always quality. Thank you for your work!

[Patrick-rjgh]

I really appreciate your data driven approach Ramin. It’s such a refreshing contrast to the pure speculation that seems to characterise a lot of the prevailing opinion.

[stevo]

What I'm curious about is all the longer term government bonds in circulation, many held by central banks. When say the base rate rises to 2%, many billions of the bonds issued during the 2010's with low coupons will drop significantly in value. Not only will there be a rush to sell them, but the reduced value also impacts the balance sheets of those low coupon bonds held by central banks. The market will demand the newly issued bonds with higher coupons. This demand may give the wrong signal to governments to borrow even more. And the fall in value of bonds held by central banks will reduce their ability to sell those bonds for cash to tighten the money supply.

[traydar]

Interesting perspective and logical. In practice if inflation is more aggressive than transitory the medicine will have to be administered early - Q4 2022 I feel.

[harryj]

When you pull the pacifier from a spoiled child, you shouldn’t expect something nice gonna happen.

[andrewmarsden]

US financial markets will correct irrespective of interest rates. The Fed will then use that opportunity to raise rates as they will not be fully blamed for the stock market losses.

[StephenHaley]

Hi, it would be nice to have an update on this topic. Since you made this video, the unemployment rate dropped significantly faster than your “slow decay” model suggested, and continued following more of a “fast decay” trend.

[unixspice]

4:50 3rd column from bottom "Shelter 2.6%" is that Rent ? If so watch this figure....

[rere]

Thanks for the content! Can you please keep posting updates about where we are on this chart, say, every ten weeks?

[Ganok]

Thanks for video! I understood everything at first without re-watching the video, which is a first. Sounds like the recovery might take longer than markets expect then :)

[mrwolsy]

How can the u.s.a fed raise rate when the u.s.a gov has runaway compound interest at current rates?

[jayhay]

When OPEC meets, they're "Prime objective" is to gain as much as possible without incentive for the alternative. When the alternative starts to get traction? Just lower the price of your solution until the interest in the alternative wanes from the pains. Rinse and repeat. No different for the Fed?

[joesmith]

Thank you for the awesome content! Do you think that base effect was still in play in the hot numbers of June? I would reckon that argument is getting pretty weak at this point. Also, month on month numbers are very high too. As for the job market, the US economy created over 9 million jobs in a month. But there is nobody who wants them. Wage inflation?

[CaseyBurnsInvesting]

They’d rather see hyperinflation than stock prices go down.

[Mshukrimahadi]

Hi. Pls make a video about credit impulse and how it affects the market. Appreciate it.

[abhayahettiarachchige]

Cars are at transition stage to EVs, most people are going for hybrid & electric ( even used ones), so prices have gone to a permanent high level???
One car dealer told me hybrid cars are assets these days because value of used cars are not dropping much. I think it is true??

[timwood]

I believe the right thing to do is follow the science and leave interest rates low as Ramin says. But, I also believe the policy makers will doubt the science and feel that the length of time passed has been huge and act emotionally by raising rates.

[geetpeetnsnsnjj]

I think the scarring effect you mention is made worse by young people entering the jobs market that would otherwise not be classed as working age thus slowing down the rate of reduction in the unemployment rate. Would be interesting to see outcomes from model if you could split unemployment into different cohorts e.g. youth etc.

[rickj]

Wonder what this will do to mortgage rates?