15 March 2010

Fed Starts Laying Groundwork for Higher Rates

msnbc: Issue for Fed is not if, but when rates will go up
Inflation potential will be topic when central bank leaders meet this week

Federal Reserve policymakers may signal at their meeting this week how and when the improving economy will lead them to start raising record-low interest rates.

Higher rates are still months away, Chairman Ben Bernanke and other Fed officials have signaled in appearances on Capitol Hill and in speeches. They've indicated that low rates are still required to foster the economic rebound.

Yet once the recovery is firmly entrenched, Fed policymakers will need to raise rates to keep inflation in check. Before they do, they first will want to signal that credit will soon be tightened. The trick is doing so without jolting investors and borrowers, who would face higher rates on certain credit cards, some mortgages and other loans.

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