Shopping for growth

Michael Roberts Blog

This week, at its July meeting, the US Federal Reserve Bank decided not to alter its current policy rate of interest – a rate that sets the floor for all interest rates for borrowing in the US and across the major economies.  Last December, the Fed hiked its policy rate from all-time lows because Fed chair Janet Yellen reckoned the US economy was “on a path of sustainable improvement”and she was “confident in the US economy”.

It was expected that the Fed would continue to raise its interest rate towards ‘normal’ levels this year.  However, contrary to Yellen’s prediction, US economic growth slumped in the first quarter, while the Chinese manufacturing powerhouse seemed to be in trouble (with growth slowing, debt rising and the yuan falling).  The world looked in a bad place; so the Fed baulked at further hikes.

After signs of slightly better economic data in…

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