The US central bank has set its nine hour maximum number over the past four years. Economists expect time to adapt, even in Europe, but now the market has returned.
Christian Lie, Danske Bank's innovator, explains that the top-down version of the Fed means that the market is now believing that a change to interest rates will be a cut.
– Market rates are higher than the overall interest rate for the next 12 months, while consensus among the US economy remains one chance round of interest, according to Lie.
A smooth cut in this context means a reduction of 0.25 points points.
He is the Federated Union of the Federal Reserve, which is the name of the US central bank.
The reason why the Fed goes from an increase in interest rate to cuts in interest rates is very unusual. The last 30 years has been only five hours.
Liewe has reviewed the timing of cuts in earlier interest rates, and on the basis of this analysis, believes that there are three scenarios for interest rates. decrease in this situation: t
1. Place pressure in the financial markets
That is why the Fed broke the rates of interest three times in 1998.
Liend believes that a serious correction in the stock market or a greater sustainability of the yield could lead to the FED charging levy rates to prevent access to corporate finance.
"In such a scenario, the Fed will cut its maximum level to allow the financial markets to survive and the threat to the right economy remains," Liend said.
The key strategy argues that financial markets are now putting the economy at greater risk than it was before. It states that financial investments today make up twice the maximum amount of investments in capital, rather than the financial crisis. Therefore, the risk of increasing trade-offs in financial markets is potentially in economic decline.
"This may be one of the reasons the respondent gave a response after the total price had fallen in December and December," said Lie.
2. Going up inflation
In 1995, US inflation was so low that Fed responded by cutting flat rates. In theory, this can happen again: t
“If inflation was going slower and falling below 1.5 per cent, this would scare the Fed,” Liede says.
He believes that the same thing will arise if vacant capacity in the labor market is greater than expected, resulting in a lack of pay shortages and a more sustainable level of unemployment.
“As it has been done in 1995, Fed will be able to cut rates of interest to raise the ambition of inflation.” T
3. Fight against decline
The most common reason is that bank rates of the main banks are at odds with economic decline, or decline, in other words.
Liend believes that this could give the Fed a stronger response.
"With the declining trend, Fed could reduce the main rate to a percentage, as in time of December 2008 to December 2015," Lie said.
He notes that weaker development in US sales, business production and housing construction makes the US economy much weaker in the first quarter of this year than in much of 2018.
"Concerns should be raised as a result of company capital investment and future plans for deposits as this is vital to sustaining the cyclical growth," said a entrepreneurial.
Furthermore, if the crop yields another crop or other key features could fall as a result, this may create a greater fear of decline, according to Lughda.
Danske Bank's main position is that the USA's economy will increase by 2.4 per cent this year and by 1.9 per cent by 2020.
"We are more concerned about the decline in the US economy in 2020 or 2021 than we are this year," said Lie. (Rules) tDagens Næringsliv MP and / or our providers. We want you to share our examples of how this is connected, which continues directly on our pages. Copies or other forms of the whole material may only be made after written permission or as permitted by law. For more information please see this. T