The American federal does not rule out the return of interest rates to zero within 7 years
In a remarkable development, it may reshape the American monetary policy in the future, confirmed a recent study it conducted American Federal Reserve researchers – Among them John Williams The President of the Federal Reserve in New York – that The possibility of interest rates to return to the zero level is still standing In the medium to long term, although the current benefit continues at high levels.
A study that expects a 9% probability to return to zero interest
According to the recently published study, the researchers estimated A 9% probability for the return of interest to what is known as the “zero limit” over the next seven yearsThis means that economic conditions may push the US central bank to Following a facilitator’s monetary policy similar to the one that the world witnessed in the wake of the 2008 and 2020 crises.
The study indicated that Changes in market expectations about future interest It is the main factor that enhances this possibility, in light of the existence of indicators on the slowdown in global economic growth, and the escalation of fears of stagnation in some sectors.
Back to facilitating policy?
Despite the current trend towards installing or even raising interest rates to face inflation, these expectations indicate that The current stage of cash tightening may not last longAnd that the financial conditions may compel the federal Return to traditional motivation tools If the American economy enters into a shrinkage.
Trump enters the line: attacked Powell and called for resignation
In a related context, US President Donald made Trump His attack on the Federal Reserve CouncilHe accused his boss Jerome Powell With “failure to perform his duties”, and calling on him to Immediate resignation.
Trump stressed that interest rates should be at 1% or lessConsidering that the current federal policies The costs of borrowing are high on the US governmentAnd it hinders economic growth, especially in light of the continuation of the customs duties imposed by its administration.
The legacy of previous crises: from 2008 to 2020
It is reported that the federal reserve has previously resorted to reducing the benefit to zero during:
- The global financial crisis in 2008After the collapse of major banking institutions.
- Corona in 2020To counter the sharp decline in economic activities.
This policy helped pump liquidity and motivate markets, but it also contributed to Asset enlargement and high levels of public debt.
Are we facing a new stage of cash facilitation?
Despite the current trend towards cash discipline, many experts believe that any A significant decline in growth or a new global financial crisis The American Federal may be forced to return to:
- Reducing interest rates to low or zero levels.
- Activating quantitative facilitation programs (QE).
- Reducing the cost of borrowing to save the American economy from shrinkage.
Analytical summary: What does that mean for markets?
The return of interest rates to zero, if you get, The entire global market track will be changedwhere:
- It will become gold More attractive as a value of value.
- The shares will rise in the short term due to the low cost of borrowing.
- Power may decrease Dollar If the reduction is accompanied by a weak growth.
But on the other hand, This will increase the long -term inflationary pressuresThe risk of financial bubbles, which was a major cause in previous crises, will restore to mind.
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