The acclaimed economist, author of "Death of Money," says Jim Rickards, that the markets have just "got the cue" they need. The US Federal Reserve (FED) is now unlikely to raise interest rates again without significant notice. There is a green light for the stock markets and indeed the crypto market.
Powell's use of "patient" on Friday was not a throwaway. It's Fed-speak for "We won't raise rates without notifying you." They will do so by removing "patient" as Yellen did in March 201[ads1]5. For now, there is a green light for the bearer and the risk of behavior. The market got the queue. pic.twitter.com/A6190y6DAT
Federal Reserve Mayor Jerome Powell seems to respond to market and financial uncertainty. In addition to perhaps the pressure of the US president. On Friday, he undertook to be a "patient" and said:
"As always, there is no preset policy for politics, and especially with subdued inflation reading that we have seen coming in, we will be patient when we look for to see how the economy is developing. "
This means, says Rickards, that the Federal Reserve will first revoke this" patient "promise before moving on and considering further interest rate hikes.
Previously, no interest rate increases proposed by 2020 or later [19659009] In 2015, Federal Railways commander Janet Yellen warned that the Federal Reserve could remove a previous "patient" promise from December 2014. At that time, interest rates were not likely to be June in that year when removal of the promise in March. Finally, the federal bank did not start going on interest rates, from a level of 0.25% to December 2016.
Federal Funds Rate Rate rate Source: FRED Investopedia
Thus, a "patient" promise from Powell, if formulated in an official policy statement, it may not mean any tours in 2019. If 2015 is something to pass by, the Federal Reserve cannot consider mountain rates until 2020.
Powell is responding to threat difficulties [19659013] Federal Reserve Chairman Jerome Powell. Picture from Shutterstock.
The positive US work report suggests that there is no need for the Federal Reserve to change its monetary policy.
However, there are a number of other factors that may mean that the United States and the globe are concerned with a decline. These causes include trading issues and stock market volatility. In addition to the performance of other major economies such as China and Europe.
In view of U.S. Pat. President Donald Trump's point of view, the Federal Reserve has no government support to continue interest rate increases. And while it's not as steep as other historical interest rate increases, hiking has been frequent. Additional reasons why the Federal Reserve could adopt a wait and see approach instead of risking the United States back in depression. Powell said Friday:
"We will be prepared to adapt the policy quickly and flexibly, and to use all our tools to support the economy, it should be appropriate to keep the expansion on track, to keep the labor market strong and to keep inflation close to 2 percent. "
Bets on a rate cut
CNBC Mad Money host Jim Cramer also said the possibility of price increases could be taken" off the table "and that:
" I bet a lot money actually flows back to the market given that Powell has come around. He gave this market a big and proper boost: Powell Pop. Suddenly the biggest negative had been removed. "
CME FedWatch Tool also had the odds of another interest rate increase by January By 2020, 70% in December 2018. When Dow died 660 points on Thursday, the probability fell to zero percent. It rose to a 1.8% chance of an interest rate increase by 2020 on Friday with the publication of the job report.
In fact, Wall Street now expects an additional charge before January 2020.
Markets now are focusing on price reductions Source: CNN
While a further increase in interest rates in 2019 cannot be excluded, it now looks very little. The stock markets will still roil for a while outside the latest recent increases as well. But Powell may well have taken the pressure off and we could see a decent market recovery.
