by Jocelynn Smith
The Sovereign Investor
The Fed has begun the unwieldy process of turning the Titanic.
It didn’t surprise anyone that Janet Yellen chose not to move interest rates at its latest meeting, but it was interesting that she took that first step and acknowledged softness in exports and business investments, while backing off the Fed’s expectations for four interest-rate hikes this year by moving to just two expected rate hikes.
But the Fed has to be careful. Announcing that it was wrong and slashing interest rates would send a massive shock wave through the global markets. And we can’t have that. We’ve got to turn this ship slowly. Yellen starts with reducing expectations on rate hikes and giving little hints that the economy isn’t as rosy as we’ve been led to believe. And then … Bam! Negative interest rates.