There are a lot of eyes on the Federal Reserve right now. Many financial experts assume the interest rates will increase again later this year. But at the same time, there are those who feel the opposite will be true. The future of the US economy may very well hang in the balance, and things are not looking overly positive right now.
What Will Happen To Federal Reserve Interest Rates?
Just because enough people want something to happen, does not mean it will take place. Many people assume the Federal Reserve will increase interest rates later this year. However, there are clear warning signs the exact opposite may come true. To make matters even worse, it is very doubtful the Fed can fight off a recession if the US economy were to collapse.
While the Brexit may not have a negative impact on the US economy just yet, the aftershocks will not be felt until roughly a year from now. In that period, a lot can happen, and the US economy may be off far worse than it is right now. Interest rates are already low, and fiscal stimulus measures are not up for debate right now.
There are many different factors which influence the economy in any given country. First of all, there is consumer spending, which seems lackluster in the US for quite some time now.Additionally, there are corporate earnings, which are not showing a promising outlook for 2016 so far. Plus, the Brexit leaves a lot of things up in the air, particularly in the financial world.
The Federal Reserve also finds itself in a very awkward position where interest rates can not be normalized. So far, there is zero intention of increasing the internet rates. In fact, it is not unlikely the rates will be lowered again later this year, depending on how the economic situation evolves.
For the longest time, central banks have fought tooth and nail to fight off a recession since the financial crisis of 2007. However, there is only so much they can do to stave off the inevitable. For the time being, it appears the Federal Reserve is completely out of ammo to do anything about even the slightest shock wave. Bracing for the worst, and diversifying investment portfolios is advised.
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