Fed Members Leaning Away From Interest Rate Increases
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What market headlines and personal finance stories open the episode?
with your money briefing. I'm J.R. Whelan at the Wall Street Journal in New York. A journal reporter who covers the Federal Reserve got a one-on-one interview with FOMC member James Bullard. You'll hear why Wall Street likes what Bullard had to say. That's next. First, these money and market stories you should know. The Wall Street Journal Real Estate Bureau reports on two townhouses in New York City's Harlem neighborhood asking a record $27 million.
Which luxury real estate and Harlem townhouse sale does the Journal report on?
The two homes, which are 9,000 square feet each, could be combined into one mega mansion. The two houses were formerly members of the Dwight Mansion, named for John Dwight, the founder of the company that created Arm & Hammer Baking Soda. The journal also reports on the growing conflict over college debt intensifying among American families. Tuition increases have outpaced household incomes, just as parents are facing myriad financial obligations, including supporting their own parents, saving for retirement, health care costs, and sometimes their adult children's living expenses. A recent Sallie Mae survey says that parents currently saving for their children's college believe they'll be able to cover 37% of the cost from savings.
But parents who are paying for children already in college actually cover just 10% from savings. And while there's plenty of reporting on college loan programs and grants for low-income students, oftentimes forgotten is the number of college students who struggle to buy food. A study by the Government Accountability Office says that about 2 million students on college campuses may be going hungry and do not have access to or are not familiar with resources like food stamps, and that could be forcing them to leave college without graduating. The first-ever study of its kind says more than half of college students who list risk factors for what is known as food insecurity did not participate in assistance programs.
And as of September of 2018, more than 650 colleges have or plan to launch food pantries for students.
As recently as November, the Federal Reserve was expected to raise interest rates as many as four times this year. But in light of stock market volatility and wavering economic indicators, that's been dialed back to two. But is two too many?
How are rising tuition and college costs affecting parents and students?
It is in the eyes of at least one voter on the Federal Open Market Committee. And Wall Street Journal reporter Michael Derby is on the line with us with details. So, Michael, you spoke with James Bullard. He's the chairman of the St. Louis Fed. He has a voting role on the FOMC, and he feels in terms of interest rates, the status quo so far is just fine.
Yeah, Mr. Bullard has long, actually for several years, been arguing against interest rate rises, believing that if there's not that much inflation pressure in the economy and basically the overall inflation gauges show that inflation has been at best at the Fed's 2% target, but mostly below it. There's basically – he hasn't really seen any justification for raising rates. And so what's happened is what he fears now is if the Fed does go forward with more interest rate rises, he's worried that that might actually be the thing that – he doesn't specify how many rate rises it would need to be. But he's worried that continuing to do interest rate increases could actually send the economy into recession.
And what's been interesting about where Mr. Bullard is because, as I suggested, he's been opposed to these rate rises for a long time. Over the last few days, a number of Fed officials have shifted in his direction. And that caution that you know, that that uncertainty about the outlook you alluded to in your opening, that's caused a whole bunch of Fed officials to also go and say, like, hey, maybe it's time to be patient. You know, we have the collective assessment is for two rate rises this year.
What does the GAO study reveal about college food insecurity?
But now you see Fed officials saying we've got a while to take stock of things, see if the market view is right, see if our view is right. So another Fed official who had been actually fairly hawkish, Boston Fed leader Eric Rosengren, for quite some time he talked about how he wanted more interest rate rises than all of his colleagues.
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Chapters
5 chapters
1
What market headlines and personal finance stories open the episode?
0:05–0:31
2
Which luxury real estate and Harlem townhouse sale does the Journal report on?
0:31–2:22
3
How are rising tuition and college costs affecting parents and students?
2:22–3:45
4
What does the GAO study reveal about college food insecurity?
3:45–6:17
5
Why have Fed interest-rate hike expectations fallen from four to two this year?
6:17–8:37
Speakers
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