Why the Fed Will Raise Rates Slower -- Yes, Slower -- Than You Think

NEW YORK (TheStreet) -- In the usual hubbub over the Federal Reserve's short-term machinations on interest rates, a bigger point has been lost today -- the central bank seems to be leaning toward keeping rates lower, for longer, than we thought.

Little noted in early reports about newly-released minutes of the March meeting of the Fed's Open Market Committee is a discussion about why the bank should move very slowly even after it begins to hike interest rates in late 2015 or 2016. The reasons: An aging work force, higher savings as people built up more reserves n the wake of the 2008 financial crisis and recession, slower expansion in the economy's capacity (or potential growth rate) due to years of weak corporate investment -- and even the tight lending environment that has made it tougher for consumers to borrow and spend their way into trouble again.

"Participants observed that a number of factors were likely to have contributed to a persistent decline in the level of interest rates consistent with attaining and maintaining the Committee's objectives," the Fed's minutes read. "In particular, participants cited higher precautionary savings by U.S. households following the financial crisis, higher global levels of savings, demographic changes, slower growth in potential output, and continued restraint on the availability of credit."

Now remember, in the hours after the Fed's meeting, the bond market decided that the FOMC's actions and minor changes in its members' forecast for rate hikes meant rates would be moving higher, sooner, than the market had thought. The minutes show that the opposite is true.

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