Forget Rate Hikes! Fed Chair Kevin Warsh Can Raise Interest Rates Using 2 Nontraditional Methods.
The Fed chair and his Federal Open Market Committee (FOMC) colleagues can influence lending rates without formally changing the federal funds target rate.
Overview
Wall Street and investors were privy to a bit of history two weeks ago. The Federal Open Market Committee's (FOMC) July 28-29 meeting marked the first time in 56 years that three FOMC members dissented so early in the tenure of a new Fed chair.
Although the Federal Reserve held interest rates steady at 3.5%-3.75%, three members favoring a quarter-point rate hike suggest how pressing an issue inflation is at the moment. This historic dissension also sent the Dow Jones Industrial Average (DJINDICES: ^DJI), S&P 500 (SNPINDEX: ^GSPC), and Nasdaq Composite (NASDAQINDEX: ^IXIC) on quite the ride.
The Fed chair and his colleagues have a few sneaky ways they can influence interest rates. Image source: Official White House Photo by Daniel Torok.
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Source
Originally published at www.fool.com.