Time for USD ????

[Smurf1976]

Just wondering, but how much public pressure does the Fed face over interest rates? Need someone who lives in the US or has spent quite a bit of time there to answer.

Would the average "man on the street" know what the present rate is? Would the average voter be likely to change their vote due to a Fed decision? Do people at work, on the bus or wherever ever talk about interest rates and what they expect? Is a Fed announcement to increase rates front page news in non-financial papers? If the rates had started rising 12 months earlier than it did, would that have likely resulted in Bush losing the election?

In other words, how big an issue are interst rate for the general public living in the US.

My reason for asking is that in some countries there are very major political implications to even a small rise and I was wondering how the situation compares in the US. I am thinking that some countries might limit rate rises for political reasons. That is, central bank independance under threat? I will elaborate once I know how the US situation compares.

[jasonjm]

to the average person in the USA, interest rates are a complete non issue unless some sort of crisis occurs, such as housing bust, stock market crash, etc etc

other than that, the average person on the street here does not care whether rates are 2% or 6%, nor do i think they know

Even if some crash or crisis occurs, the public will not really care what the rates are doing, so long as someone fixes the problem, the rates again are not what the public will focus on.

The problem will come from politicians, who know very well that they will not be re-elected if the economy nose dives, and they also know very well every last economic problem has been solved with a series of rate cuts.... so this is where the FED will receive pressure from

so to answer what you are really asking is, yes i think US rates will go to 4%+, some sort of mini crisis will occur in 2006 and by 2007 rates will be lower again

for that an other reasons, I think long USD this year, and short USD in 2006 to 2007

and there is such a long lag time from rising rates till when they are felt that it really takes age to have an effect, at least 12 months I think

so far I havent noticed a single effect of the FED rate hikes yet. Only in the last 2 weeks has the market started making noises, but no real changes yet (and its been 9 months so far)