Fed should cut rates to zero or less

Trump calls for Fed’s ‘boneheads’ to slash interest rates below zero

Trump calls for Fed’s ‘boneheads’ to slash interest rates below zero

With fears of a recession growing and Trump reportedly trailing several top Democrats in early polling (if you believe polling), it looks like the president is simply trying to goose the economy ahead of the election.

US President Donald Trump in the last minutes argued that the Federal Reserve should get the policy rate down to zero or even lower and should then start to refinance the debt. Trump has publicly berated US Fed chair Powell and the central bank for failing to loosen monetary policy fast enough.

"We have the great currency, power, and balance sheet", he tweeted. He has repeatedly blamed the Fed and Chairman Jerome Powell, who goes by Jay, for raising interest rates too steeply in 2018 and constraining the economy as the president pursues a trade war with China.

A recent study published by the University of Bath found negative rates decreased lending.

Attorneys: OxyContin maker agrees to tentative settlement
Experts estimate as many as 400,000 people may have died from overdoses and related problems in the past several decades. New York, Massachusetts and CT are among the states who say they are not part of the tentative deal, the AP reports.

Meanwhile, even though Trump hand-picked Powell as head of the USA central bank, he quickly soured on his by-the-book approach and insistence on the Fed's political independence. "A once in a lifetime opportunity that we are missing because of 'Boneheads, '" Trump said, in perhaps his most insulting comment to date about the United States central bank. The Fed's benchmark rate is now 2%-2.25% following a quarter-point reduction on July 31 - the first cut since the Fed lowered rates effectively to zero in 2008, during the worst financial crisis and economic downturn since the Great Depression.

The New York Times gives the larger global economic context: "The European Central Bank is expected to cut a key interest rate to a record-low negative 0.5 percent and roll out additional stimulus measures at its meeting on Thursday, in a bid to shore up very-low inflation and waning growth in important economies like Germany".

Investors overwhelmingly expect the Fed to deliver a 25-basis-point rate cut next week. The policy is meant to account for extremely weak economic conditions by essentially charging banks to hold reserve deposits at the Fed.

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