With interest rates being so low, they don’t have that either. What are they going to do? Lower it below zero? Just wondering how high they can get it before the next recession.
In order for central banks to mitigate future recessions, they need be able to make rates go down too, not just not increase them. And when rates increasingly approach zero, there won’t be much they can do, except buy the assets - which they have done and are not supposed to.
So weird to think that near-zero interest rates are the best you can do for the next 10 years. I'm pretty sure everyone way saying "lock in this low interest rate before they go up again!"
Because we will have a recession sometime in the next couple years, and if the Fed keeps interest rates at 0, it will have no ammunition when the time comes.
Don't see why they would need to hope that interest rates remain low. Interest rates are already low, so they can sell debt at current interest rates for the term needed. I do think you're correct that low interest rates are a factor.
They talked about possibly raising rates in 2023. In my opinion, they're bluffing. They can't do what Paul Volcker did in the 80s and raise rates to stave off inflation without crashing the stock and real estate markets deeply. They can't raise rates without triggering a deep, deep recession and taking everyone's retirement fund out with it.
Interest rates now are incredibly low because central banks are keeping them low in the aftermath of the 2008 crisis. But the fact that our economies need such incredibly low interest rates to generate growth isn't good at all. What will they do with the next crisis? Go negative?
reply