Interests Rate: Fed Chairman About Monetary Policy

Federal Reserve Chairman Jerome Powell gives opening remarks on Tuesday at a monetary policy conference focused on long-term issues, but set now to the backdrop of intensifying market speculation that global trade worries may force an imminent Fed rate cut. Since the Fed last met, President Donald Trump has slapped new 25 percent tariffs on $200 billion of Chinese imports, taken aim at Chinese telecoms giant Huawei and extended the use of tariffs to achieve unrelated goals by threatening new import taxes on Mexico unless immigration slows. To investors and even some of Powell’s colleagues, it has become a different world, with U.S. bond yields falling at some of their fastest rates since the 2007 to 2009 economic crisis and expectations the Fed may change its “patient” approach and reduce rates multiple times this year. Over the past five days the interest rate on the 2-year Treasury bond fell a third of a percentage point, the steepest five-day drop since 2008.On Monday, St. Louis Fed President James Bullard became the first to say that the “darkened” outlook for trade warranted a rate cut as “insurance” against the possibility the trade war takes a deeper than expected bite out of U.S. economic growth. It could also offset the seeming pessimism that has taken hold in bond markets, Bullard said.

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Experts see the U.S. continuing to grow, but  looming risks include trade wars, interest-rate mistakes and the ballooning budget deficit..So, black or white...

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What if inflation increases with all the tariffs? Increase rates?

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The market is screaming .... the economic slowdown is on the horizon. 

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1 minute ago, pinto said:

... the economic slowdown is on the horizon. 

It's easier to say: Recession is on the horizon :)

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If I remember well:  Wasn't just 6-9 months ago the FED was considering 4 rate hikes in 2019?

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A point that I just made on another forum is that money continues to pour (or perhaps seep) out of China, Russia, India, Brazil, Venezuela, and other areas that are at best capricious and at worst in a state of collapse. This money is leaking out faster than western governments are issuing debt to soak it up, particularly in countries like Germany, Switzerland, and Denmark. Thus we're getting a 'flight to safety' that is unprecedented in human history. As big as the US is, a $1 trillion deficit is still smaller than the amount of money that wants to escape the grasp of absolutist regimes.

A lot of indicators that would have been reliable under different circumstances are now telling a different story.

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