Here’s Why The Fed Can’t Raise Interest Rates

Here’s Why The Fed Can’t Raise Interest Rates

Here’s Why The Fed Can’t Raise Interest Rates by Tony Sagami, Mauldin Economics

Play Quizzes 4

After raising interest rates in December, the Fed said repeatedly that it intends to raise them gradually, and only if economic growth improves.

In fact, the Fed expects to raise rates even more gradually today than it did three or six months ago because it doesn’t think the US will hit its 2% inflation target until 2018:

Is First Gen An Overlooked Power Play That Deserves A Re-Rating?

environmental 1651092002The post was originally published here. Highlights: Resolving gas supply issues ensures longevity A pioneer in renewable energy should be future proof Undemanding valuation could lead to re-rating Q1 2022 hedge fund letters, conferences and more

“In light of the current shortfall of inflation from 2 percent, the Committee will carefully monitor actual and expected progress toward its inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate.”

Interest rates – A 2% inflation rate is just an excuse

I think the Fed is targeting a 2% inflation rate because it offers the best excuse to keep interest rates low. And the reason the Fed wants to keep interest rates low is that the carrying cost of our nearly $19 trillion of national debt would explode if rates moved substantially higher.

More than anybody else, the US government will feel the most pain as the largest borrower of money.

Interest Rates

Zero interest rate policy and QE is more about keeping our debt bubble from exploding.

By the way, read Endgame: The End of the Debt Supercycle and How It Changes Everything by John Mauldin. This book will help you to understand how the Fed enables the Washington DC spendthrifts.

Subscribe to Tony’s Actionable Investment Advice

Markets rise or fall each day, but when reporting the reasons, the financial media rarely provide investors with a complete picture. Tony Sagami shows you the real story behind the week’s market news in his free weekly newsletter, Connecting the Dots.

Updated on

Simply stated, we believe in taking a realistic approach to the economy and investment markets that starts by stepping back from all the noise and fear in the daily news and, with the aid of our deep network, focusing on the search for the world's best income opportunities and for great companies doing great things—both in North America and around the world. Welcome to Mauldin Economics!
Previous article Black Hole Collision Might Have Generated Light Flash
Next article Market Sectors To Follow In The Second Quarter

No posts to display