FED OFFICIALS SAY INTEREST RATES WON’T FALL – WE DISAGREE


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Last week, three Federal Reserve bank officers said they see no need to lower interest rates, despite market expectations of as many as two cuts this year.
Raphael Bostic, president of Atlanta’s Fed branch, said on Friday he strongly expects “that the economy is not going to see rising risks and it’s going to stay stable so we won’t have to do anything.”
Bostic added, “If we see more weakness than expected, then I’d be open to moving. But that’s not my expectation.”
John Bullard, president of the St. Louis Federal Reserve, said he also sees slim chances for a rate cut unless the economy changes dramatically.
“There’s a high probability that the coronavirus will blow over as other viruses have, be a temporary shock, and everything will come back,” Bullard said.
On Thursday, Fed vice-chair Richard Clarida also said he doesn’t expect interest rates to change.
TREND FORECAST: Believe the markets, not the banksters.
We continue to predict that the global slowdown will lead the Fed to cut rates to zero or into negative numbers this fall if not earlier. Central banks around the world will continue to inject monetary methadone into the markets until the banking sector becomes precarious and central banks run out of room to cut rates further. Many are close to that point already.
Indeed, even if official interest rates are well above zero or even in low double digits, considering rising inflation rates in nations such as Turkey, India, China etc., in reality, their rates are already foundering in zero-to-negative territory.
Therefore, as we have been noting, with the exception of the U.S., Canada, and a few other nations which will get a brief boost from lower rates, more quantitative easing measures and the further lowering of interest rates will neither boost sagging economies nor stall the “Greatest Depression” hitting in 2021.
 

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