InternationalMarkets & Economy

Fed liftoff expected in Dec. — good thing we’ve had plenty of runway

  • The Fed may get the bird airborne, but not for long. Nor for good reason.
  • Meanwhile, central banks outside the U.S. have been trying desperately to raise inflation to 2 percent. And failing.

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Tell us about mobile technology in your business for a chance to win an iPhone 6s. Take our survey! An overwhelming consensus of economists expects Fed liftoff at last in December. Good thing we’ve had several hundred miles of runway. An equally overwhelming consensus in the bond market thinks the Fed may get the bird airborne, but not for long. Nor for good reason. After a peculiarly strong employment report last week, long-term rates rose about a quarter-percent, but by this week’s end are trickling back down a bit. There is not the slightest trading anticipating a long Fed flight upward, not even a gradual one. Let’s explore an alternate universe, a counter-factual. The Fed’s leadership, Janet Yellen, vice-chair Stanley Fischer, New York Fed’s William Dudley, joined by hawks at regional Feds, all are united in orthodoxy: If the unemployment rate falls too low, wages will rise too fast and inflation will result. Fed-speak has forever included a crucia...