Anticipation of the risk of the euro slipping against the dollar is rising in financial markets after last week’s rate cut and the scenario that a Donald Trump presidency could spark a global trade war. Days after Trump suggested that US tariffs could target Europe as well as China and other countries, European Central Bank …
Tag: interest rate cuts
Cutting Interest rates is a path full of Landmines
In a reduction in policy interest rates – for the first time in 4 years – by 50 bp. in the range of 4.75% to 5%, the Federal Reserve (Fed) advanced, in an attempt to stimulate the growth of the US economy, to satisfy investors and to raise the morale of the Democrats, especially the …
Bank of Canada: Third consecutive rate cut
The Bank of Canada proceeded with its third consecutive reduction in interest rates. Its prime lending rate fell to 4.25%. The 25 basis point rate cut was widely expected by the market, given the continued weakening of the economy and subdued inflation. In his written remarks, governor Tiff Macklem said the central bank’s decision reflected …
White House pushes FED for rate cuts and blows up 2% inflation target – Trump’s plan
New York Federal Reserve President John Williams said in a politically charged statement on Friday (5/3) that the US central bank needs independence from the White House in order to return inflation to its 2% target. The election cycle threatens the independence of monetary policy as pressure mounts for interest rate cuts to ease lending …
Interest rate cuts will send Corporate debt into “junk” bonds
The announced interest rate cuts by the Federal Reserve will lead to lower yields on junk bonds. In other words, for a company with a very low credit rating, it will lead its debt to the category of “junk” bonds. The question is whether investors will be willing to take on the greater risk of …
The battle with inflation and recession is becoming increasingly difficult
The entire financial press’ narrative of a “soft landing” of the economy – US and global – and avoidance of recession is fostered through the “uses” of the FED and ECB, with the former fueling investor expectations for aggressive rate cuts in time that has simply put a “brake” on their rise. What they cannot …