Fed Interest Rate: Negative Rates Are A Game Changer

Fed Interest Rate

Fed Interest Rate Turns Negative

Before getting to the article in question  we would like to present you with an excerpt to an equally interesting article:

” We live in a world where the main driving force behind this illusory economic recovery is hot money and fraudulent data manipulation.  According to Government stats, inflation is nonexistent, but anyone with a grain fo grey matter understands that this is not the real case.  Rents, education and medical costs are soaring, and salaries are dropping when inflation is factored in.

In simple words, you are working more and more for less and less. This is not the American dream, but it is more in line with one of the worst scenes from a very scary movie.  The primary driver, however, is hot money; cut this supply and the economic recovery comes to an end.  Central bankers are aware of this, and that is why they are embracing negative rates as it’s the only way to maintain this illusion. But, the million-dollar question is for how long? ”  Why everyone should own some Gold & Silver Bullion

Negative interest rates are dangerous

Although the Federal Reserve embarked on a long-anticipated move to increase interest rates last month, the Fed still has a ways to go before rates are normalized. The increase in the fed funds rate to a nominal range of 0.75% to 1% set it still considerably below the rate of inflation, which was 2.7% for the 12 months ending in February.

Interest rates for most of the last decade and a half have been unnaturally low — in “real” terms the benchmark rate has already been negative — reflecting policymakers’ misguided approach to try to accelerate economic activity. Economist Richard Sylla has argued that we now have the lowest interest rates in recorded history.

And yet, some other countries have gone even further, implementing negative interest rate policies. Speaking of negative rates at a congressional hearing last year, Fed Chair Janet Yellen said, “I wouldn’t take those off the table.” Full Story

Yellen On The Fed Interest Rate Cuts

“It’s not out of the question that the Fed may need to raise rates again,” Yellen said Wednesday in an interview on CNBC, before acknowledging that a cut may also be in the cards. “If global growth really weakens and that spills over to the United States, or if financial conditions tighten more and we do see a weakening in the U.S. economy, it’s certainly possible the next move is a cut, but both outcomes are possible.”

Yellen’s successor at the U.S. central bank, Jerome Powell, made a dramatic revision to the Fed’s messaging in January, suggesting the Fed may be done raising interest rates in this economic expansion. On Jan. 30, the Fed’s post-meeting statement said officials would be “patient” on policy and signaled the next adjustment for rates may be up or down.

What’s going on now reminds me a lot of 2015, 2016,” she said. Under her leadership, policymakers pivoted from projecting four rate hikes for the year to making a single move in December as spillovers from weaker growth in China dented the U.S. outlook. Powell has also invoked the experience of 2016 to emphasize the importance of policy flexibility.

The Fed’s hand should also be stayed, she said, by the lack of any serious inflationary pressures.

“Now that they’re in a range of neutral, it’s not necessary to act preemptively,” she said. Full Story

So rates could go up or down, do we need this jackass to arrive at this conclusion; once again, proving that experts are as wise as mules.

 Negative rates are scaring investors?

The Crowd is always afraid of dealing with something new and negative rates are an unknown but one thing is know, negative rates are going to destroy savers and have a terrible impact on fixed income individuals.

“Positive interest rates and the desirability of compounding [interest] have been among the most fundamental historical building blocks [in finance],” Marks writes. “At a minimum, negative rates mean there’s increased uncertainty, and thus we have to proceed with more trepidation. Whatever we knew about the past about how things worked, I think we know less when rates are negative.”

Negative rates, in other words, are a classic known unknown. We know what they are. We don’t really know what they do. Full Story


How To Play The Fed Interest Rate Cut Game

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