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The US group of central banks does not see that dangers. The country is doing much better than before the 2008 crisis, notes the Fed. But it must be emphasized that stock prices have risen sharply and that corporate debt is historically high.
In case of an external shock, such as a growing trade war between the United States and their major trading partners or a disorderly break between Britain's Groot and the European Union, according to experts, a firm market correction may occur. Read: The times of black jets at fairs
Transparency
The Fed intends to submit such a report twice a year. Previously, this type of information was disseminated in various other reports. Fed Chairman Jerome Powell, who took office earlier this year, believes that transparency on this topic is very important.
Powell also spoke on Wednesday. In a speech, he said the outlook for the US economy was still "solid". The head of the central bank added that interest rates in the United States are only slightly below the neutral level. He also said that in a year or more exactly the impact of the Fed's rate hike on the impact of rate hikes would be clear. This gives the impression that Powell wants to respond to the wishes of President Trump, who this year repeatedly addresses the Fed because to generate interest for him is detrimental to economic growth.
Stock Market
Since the crisis, interest rates have been extremely low for years. The Fed uses the interest rate to support the economy if the situation deteriorates: by lowering interest rates, borrowing becomes cheaper and more money can be invested. interest rate increased. The Fed is on the one hand to reduce inflation and avoid overheating of the economy, which has a negative effect in the long run.
During the exchange in New York, Powell commented. those who indicate lower interest rates receive a warm welcome. Stock prices on Wall Street have clearly increased. For the stock market, the rise in interest rates is bad news. Because the more money there is cheap, more money is routed to the stock market; and that drives prices.
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