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Trump had already exploded the last rate hike in September. At the time, he said "worried about the fact that they seem to like raising interest rates, we can do something else with money," he said. -he declares.
Indeed, the Fed pushed short-term rates higher by raising its target range for federal funds seven times, after keeping it close to zero for years after the financial crisis. But the target range for federal funds ranges from 2 to 2.25%, well below the 3% that many consider neutral.
"[QE] helped to reduce rates. They are not doing it anymore and it is more complicated now than when the Fed started to drive automatically with cuts off its balance sheet, "Swonk said .The problem, it's that the deficit is going down. will rise to more than $ 1 trillion in 2019 for tax and stimulus cuts.
"The federal government has more obligations to sell and you do not have an additional buyer," Swonk said. Even China, the biggest holder of Treasurys, has bought less, although it is not a seller.
Goncalves said the Fed may reveal some of its balance sheet ideas when it releases the minutes of its last meeting on Wednesday. Powell had targeted this fall the time for the Fed to review its balance sheet policy.
"We should congratulate the Fed and Powell for their success and their withdrawal from the market without imploding, we should applaud the US financial markets, we should be happy about it, it's the ultimate sign of success, we're getting QE," he said. said Goncalves.
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