Is The Fed Ready to Abandon Loose Monetary Policy?

Interest rate hikes could come sooner than we think, especially if the plans laid out by President Barack Obama in last night's State of the Union Address actually pan out. Obama offered a plan to increase employment by offering tax breaks to businesses, as well as laying out positions on other matters of economic interest.

The State of the Union Address comes on the heels of a monetary policy meeting from the Fed, in which one member of the board dissented, reports FX Street:

Fed member Hoenig dissented in the vote; as he believed “that economic and financial conditions had changed sufficiently that the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted”.

This is an interesting turn of events that indicates that, perhaps, the Fed is going to start moving away from loose monetary policy. While this is unlikely to happen in the immediate future, if Obama's plans work out and economic growth gets moving, we could see higher interest rates by the middle to end of 2010.