This is going to come back to bite us if there is another recession soon, which is likely. Central banks can usually lower interest rates to get out of recessions but that won't be an option for...
This is going to come back to bite us if there is another recession soon, which is likely. Central banks can usually lower interest rates to get out of recessions but that won't be an option for the next one.
I feel like that's weird logic. You can say that they're cutting interest rates in order to preempt a recession. It's not much good to keep the tool but get the problem.
I feel like that's weird logic. You can say that they're cutting interest rates in order to preempt a recession. It's not much good to keep the tool but get the problem.
The issue isn't really limited to this time. Rates never returned to normal following the Great Recession. They should have been creeping up in a manageable way over the last decade.
The issue isn't really limited to this time. Rates never returned to normal following the Great Recession. They should have been creeping up in a manageable way over the last decade.
At 0%, treasury bonds and cash are interchangeable for many purposes, so it doesn't do much. More likely the Fed would start buying other debt like they did last time.
At 0%, treasury bonds and cash are interchangeable for many purposes, so it doesn't do much.
More likely the Fed would start buying other debt like they did last time.
This site says the Federal Reserve will decrease the fed funds rate by another half a percent in 11 days, on top of the half percent reduction a few days ago, down to about half a percent. You can...
This site says the Federal Reserve will decrease the fed funds rate by another half a percent in 11 days, on top of the half percent reduction a few days ago, down to about half a percent.
You can see that the Fed typically reduces it's fed funds rates during recessions (shaded areas are recessions):
That means the Fed is either incredibly worried that the CoronaVirus is going to cause a recession, or they are being incredibly proactive during an election year.
But there isn't much room to reduce rates any further, unless we get negative rates, so if there is a recession, it's not clear how much more the Fed can/will do.
Tl;dr (I think) Interest rates should have been slowky hiking over the last few years so that when a recession happens they can lower them so people can get loans and stuff more easily....
Tl;dr (I think) Interest rates should have been slowky hiking over the last few years so that when a recession happens they can lower them so people can get loans and stuff more easily. Unfortunately, Trump hasn't done this.
This is going to come back to bite us if there is another recession soon, which is likely. Central banks can usually lower interest rates to get out of recessions but that won't be an option for the next one.
I feel like that's weird logic. You can say that they're cutting interest rates in order to preempt a recession. It's not much good to keep the tool but get the problem.
The issue isn't really limited to this time. Rates never returned to normal following the Great Recession. They should have been creeping up in a manageable way over the last decade.
Agreed. But I guess next step will be to print money
Negative interest rates?
Maybe. The US is generally very opposed to negative interest rates, moreso than other countries.
At 0%, treasury bonds and cash are interchangeable for many purposes, so it doesn't do much.
More likely the Fed would start buying other debt like they did last time.
I have minimal business literacy, I understand there's a recession coming soon but what exactly is this website and graph saying?
This site says the Federal Reserve will decrease the fed funds rate by another half a percent in 11 days, on top of the half percent reduction a few days ago, down to about half a percent.
You can see that the Fed typically reduces it's fed funds rates during recessions (shaded areas are recessions):
https://fred.stlouisfed.org/graph/?g=lRX5
That means the Fed is either incredibly worried that the CoronaVirus is going to cause a recession, or they are being incredibly proactive during an election year.
But there isn't much room to reduce rates any further, unless we get negative rates, so if there is a recession, it's not clear how much more the Fed can/will do.
Thank you!
Tl;dr (I think) Interest rates should have been slowky hiking over the last few years so that when a recession happens they can lower them so people can get loans and stuff more easily. Unfortunately, Trump hasn't done this.