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August is now behind us, and as a sign of the concern central bankers share over the weakness found in the world's major economies, there is no sign of any effort to rise target rates at central banks.  From the Fed to the European Central Bank, to the Bank of England and beyond, there appears to be no appetite for attempting to return to more "normal" monetary policy. We're apparently in a state of virtual permanency when it comes to "extraordinary" monetary policy which involves keeping the target interest rate at zero or near zero for years on end.  In fact, the only movement we've seen at a major central bank in recent days comes from the Bank of England where the bank cut the target rate from 0.5 percent to 0.25 percent. Except for that change, and continued declines in Australia, nothing has moved since last Spring:  In late July, the Fed declined to raise the Federal Funds rate. But, of course, they maintained the usual posture of sayi...

The Fed announced today that, as expected, it will not change the target Federal Funds Rate. This follow's last month's rate change when the Fed increased its target rate from 0-0.25 up to 0.25-0.50, which was the first increase in seven years. Today's lack of action thus leaves the target rate near what are historic lows : Given that the markets expected no change, there was little reason to expect any big movements in the markets, but according to observers in the financial media, the Fed's statement is being interpreted as pessimistic , which drove down markets further.  We've known for years that the Fed has been ill-at-ease with the overall state of the economy, of course. If the Fed had thought the economy was doing well, it would have raised rates long ago. December's rate hike came in many ways as an attempt to send the message that, yes, the economy is strong enough to warrant a rate hike.  But the Fed knows that even with a 0.25 percent hik...

The Fed today announced that it will increase the target Federal Funds rate from 0.00-0.25 percent up to 0.25-0.5 percent. The last time the target rate exceeded 0.25 percent was in November of 2008 when the higher bound of the target rate was 1 percent. In December of 2008, the Fed lowered the target rate to 0.00-0.25 and it has stayed there ever since.  Back in September, when we thought that the Fed might raise rates, The Economist noted that " The last time the Federal Reserve raised its benchmark interest rate, there was no one to tweet about it," because Twitter did not yet exist. Moreover, Zero Hedge ran a somewhat amusing article reminding us of what the world was like the last time the target rate was above 0.25. Remember Nelly Furtado? George W. Bush was still president back then, too.  The sheer length of the Fed's flatlining has made it seem that a move to a 0.5 target rate is an immense change. Here's what the huge change looks like:  The fa...