In the last week, three vocal Federal Reserve officials have been urging their colleagues to stop filling up the proverbial punch bowl.
Not only do they want the Fed to stop buying bonds (there’s already a plan in place to eliminate those as early as October) — they also want the central bank to raise its short-term interest rate sooner than investors are expecting.
This isn’t just economist talk. Doing so could raise the rates on everything from mortgages and small business loans, to credit cards and auto loans, thereby tightening financial conditions throughout the U.S.
“I believe the time to dilute the punch is close upon us,” Dallas Fed President Richard Fisher said in a speech at the University of Southern California on Wednesday.
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