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Thomas Hoenig, president of the Federal Reserve in Kansas and one of the most pro-increase of interest rates in the Federal Reserve, launched a warning to the market when stating that a long period with ultra low interest rates invites to the speculation and is dangerous. The price of money in the Unites States is between 0% and 0,25% since December of 2008.

“When your interest rate is permanently at 0, you are inviting future problems. We know that the 0 isn’t sustainable…the market knows it”, stated Hoenig.

Furthermore, the regional president of the Federal Reserve, stated that the Central Bank of the United States must be ready to increase interest rates although having high unemployment rates.

Hoenig has been positioned as of the the falcons in the Federal Reserve. He appeared in the act of the last meeting of the Federal Reserve, released on February 17th ; asking for a important change on the Federal Reserve’s official message: instead of saying that the interest rates will be low “during a long period of time” say “at the moment”.

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The Chief economist from the Bank of America in New York, Mickey Levy, believes that the decision adopted by the Federal Reserve two days ago, when increasing the discount interest rate, shows that “the financial crisis ended, in great part”.

In declarations took by Bloomberg, Levy estimates that “it is time to normalize things”, after the Federal Reserve began to trim the interest rates when lending money to the banks in the beginning of the financial crisis at the end of 2007. The economist points that this movement “doesn’t represent too much, because any bank in a situation without crisis will go to the discount office if doesn’t have problems”.

On Thursday, the Federal Reserve increased for first time since June 2006 the discount interest rates given to the banks with need of liquidity to obtain short therm financement by an increase of 0.25% to the rate of 0.75%.

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The perspectives of keeping his job in the Federal Reserve by Ben Bernanke have been put into doubt last Friday, when the Obama administration was trying to ensure its power in the Senate.

The people against Ben Bernanke, some afraid of his reelection and some disagree with what the Fed done with the financial crisis, moved against him, enlarging the list of negative votes already revealed.

Democrat senators Barbara Boxer (California) and Russ Feingold (Wisconsin) said that will be against the reelection of Ben Bernanke, that should be before the January 31st.

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The federal reserve closed 2009 with record profits, $46100 million, that the central bank will refund to the treasure.

According the Washington Post , this is the highest profit obtained by the federal reserve in their 96 years of history. The entity presided by Ben Bernanke, surpassed the analyst’s forecasts from the Bank of America, Goldman Sachs and JP Morgan, and has made it thanks to the aggressive bond purchases last year. His previous record was of $34.600 million in 2007.

At the end of 2009, the Federal Reserve was controlling $1800 billion in debt from the US Government. This figure surpasses widely the $497000 million of 2008.

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The Federel reserve is still very worried about the evolvement of labor market and and the risks on a still weak economy of the emergency package withdrawal. Furthermore inside the Federal reserve of Ben Bernanke there is divergence of opinions about how will the pressure affect the inflation rate next months.

This way, the Federal reserve showed that although the last report this November, is worried about the unemployment rate. However the bankers of the Federal Reserve state that they will need more than a good report to confirm the evidence that the labor market is recovering.

The hottest discussion between the officers of the Federal Reserve was about the forecast on inflation rate. So, some members of Federal Reserve’s open committee see low risk on the increase of prices due to the low interest rate, although they recognize that it’s important ”to stay alert” in front of possible risks.

On the other side, some members of the Federal Reserve believe that the increase on prices experimented by some raw materials could boost the inflation, a situation that could lead to higher interest rates although further improvements on the labor market.

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The Federal Reserve noted since the last report on October 21^st that the Economic conditions in the United States have improved. At the same time, the Fed featured in the Beige Book that the labor market is continuing weak, but there are some isolated improvements.

The Beige Book records the economic evolution of the 12 zones in the Federal Reserve, this institution, highlighted that in eight regions,they recorded improvements, and in the other four, the situation was remaining more or less steady this last month. The major issue for the Federal Reserve is the labor market.

Yesterday, the private Unemployment data from November was released. During the last month, the companies of the United States destroyed 169000 jobs, more than the expected by the analyst, but less than the month of October, when 195000 jobs where destroyed.

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Ben Bernanke, has stated that the federal Reserve follows very closely the evolution of the dollar, after the considerable depreciation this currency suffered in the last weeks against other currencies. However, Bernanke, highlighted that the interest rates will continue low as the economy continues weak and the employment high. Ben Bernanke participated in a talk at the Economic Club of New York, where repeated the same speech about what will do the Federal reserve in the following months.

The president of the Federal Reserve, reiterated that although the economy has returned to the growth, ” the interest rates will continue low during a long period of time”.

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