In a new report, Deutsche Bank chief economist David Folkerts-Landau discusses the timing of the highly-anticipated Federal Reserve rate hike and how the coming tightening cycle is far from typical. The uniqueness of the current economic situation makes it hard to predict what the Fed will do, but Deutsche Bank believes that a September move is likely.

Overly Loose

Given the current economic conditions in the U.S., including inflation and employment data, the Taylor Rule dictates that the current Fed funds rate should already be about 2.5 percent. In fact, based on the Taylor Rule, the FOMC should have begun raising interest rates back in late 2011.

Instead, the gap between the Taylor Rule’s projected rate and the actual Fed funds rate has been growing for nearly four years now.

Abnormal Situation

In addition to historically low interest rates, the Federal Reserve’s balance sheet now sits…

Click here to continue reading

Want to learn more about how to profit off the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!