a27s
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The Fed is at the starting line.
Yesterday I watched a bit of YouTube regarding the rhetoric of the Fed right now. Overall, I studied the issue as much as possible. I came to the conclusion that we have two options for the development of events.
Option 1.
The Fed will not rush to lower the rate or start the printing press until it sees some bad data, really bad data. Although there is currently plenty of that, and they can latch onto any of it. The Fed understands Trump's policy and what he needs, as this scenario of stimulation also suits the Fed itself. The main task here is not to keep the rate too high and not to delay events with starting the press too much, as the consequences could be more destructive. I think we will only see the consequences of the trade war by May, when the Fed might decide to lower the rate and start stimulating. The Fed operates in a narrow corridor, maintaining its power and influence on the world stage; a scenario with a severe recession is not in their interest, as the Fed would lose trust. They understand perfectly well that they are creating inflation and engaging in nonsense, but as long as this system works, they won't destroy it.
Option 1.
The Fed will not rush to lower the rate or start the printing press until it sees some bad data, really bad data. Although there is currently plenty of that, and they can latch onto any of it. The Fed understands Trump's policy and what he needs, as this scenario of stimulation also suits the Fed itself. The main task here is not to keep the rate too high and not to delay events with starting the press too much, as the consequences could be more destructive. I think we will only see the consequences of the trade war by May, when the Fed might decide to lower the rate and start stimulating. The Fed operates in a narrow corridor, maintaining its power and influence on the world stage; a scenario with a severe recession is not in their interest, as the Fed would lose trust. They understand perfectly well that they are creating inflation and engaging in nonsense, but as long as this system works, they won't destroy it.
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