The Multicultural Business Student Association is responsible for helping its members leverage their skills and accomplishments for the betterment of their professional careers. As an executive board, we do our best to facilitate these opportunities by hosting workshops, panel events, and even our MBSA week in the spring so that GWSB students as well as other enterprising students in our community can gain exposure to the business environment. In hopes of expanding upon our mission, MBSA is excited to supply more content for its members with our business blog. Publishing biweekly, the business blog is intended to offer a different perspective—one from a student—on the developments in corporate America, global financial markets, as well as the intersection between business and technology and much more.
The Great Recession of 2008 and ensuing global crisis wreaked havoc across all international financial markets. The housing bubble burst, financial institutions had to close their doors due to insolvency, while others were saved by federal TAARP (bailout) money, and the unemployment rate rose higher than 10% leaving thousands of people nationwide without work.
To counteract the contraction in the economy, the United States Federal Reserve decreased the federal funds rate, or the interest rate at which banks and credit unions actively trade balances at the Fed to near zero (.25%). The theory is that lower interest rates will enable more individuals to borrow money to be used to stimulate the economy by buying goods and services. For the past seven years, interest rates have remained at this near zero benchmark, facilitating output growth by more than 16% and steady reduction in unemployment to 5.5%. As the United States and global economy has slowly recovered from the Great Recession, economists and analysts have been wondering when interest rates will rise back to more natural levels in line with the rise of inflation (2.5-3.0%). The whimsical nature of the Federal Reserve and its chairwoman Janet Yellen, as well as their subtle indications of a rate hike has caused much volatility in an already shaky United States equity market. Unfortunately the path for the United States economy still remains foggy as Yellen announced this past Thursday that interest rates would—for the mean time—remain close to zero. In a press conference following the meeting of the Fed presidents, Yellen stated, “The recovery from the Great Recession has advanced sufficiently far and domestic spending has been sufficiently robust that an argument can be made for a rise in interest rates at this time,” but, she said, “heightened uncertainties abroad,” including the Chinese economy’s weakness, the crisis with Greece and the European Union, and slowing global growth tilted the banks decision toward holding off on raising interest rates. When interest rates do increase, which is still expected to happen this year, borrowing costs and interest rates on savings will start to climb for individuals like you and me.
Source: http://www.nytimes.com/2015/09/18/business/economy/fed-leaves-interest-rates-unchanged.html
The Great Recession of 2008 and ensuing global crisis wreaked havoc across all international financial markets. The housing bubble burst, financial institutions had to close their doors due to insolvency, while others were saved by federal TAARP (bailout) money, and the unemployment rate rose higher than 10% leaving thousands of people nationwide without work.
To counteract the contraction in the economy, the United States Federal Reserve decreased the federal funds rate, or the interest rate at which banks and credit unions actively trade balances at the Fed to near zero (.25%). The theory is that lower interest rates will enable more individuals to borrow money to be used to stimulate the economy by buying goods and services. For the past seven years, interest rates have remained at this near zero benchmark, facilitating output growth by more than 16% and steady reduction in unemployment to 5.5%. As the United States and global economy has slowly recovered from the Great Recession, economists and analysts have been wondering when interest rates will rise back to more natural levels in line with the rise of inflation (2.5-3.0%). The whimsical nature of the Federal Reserve and its chairwoman Janet Yellen, as well as their subtle indications of a rate hike has caused much volatility in an already shaky United States equity market. Unfortunately the path for the United States economy still remains foggy as Yellen announced this past Thursday that interest rates would—for the mean time—remain close to zero. In a press conference following the meeting of the Fed presidents, Yellen stated, “The recovery from the Great Recession has advanced sufficiently far and domestic spending has been sufficiently robust that an argument can be made for a rise in interest rates at this time,” but, she said, “heightened uncertainties abroad,” including the Chinese economy’s weakness, the crisis with Greece and the European Union, and slowing global growth tilted the banks decision toward holding off on raising interest rates. When interest rates do increase, which is still expected to happen this year, borrowing costs and interest rates on savings will start to climb for individuals like you and me.
Source: http://www.nytimes.com/2015/09/18/business/economy/fed-leaves-interest-rates-unchanged.html