by James Rickards
The Federal Reserve met last week and voted to keep interest rates unchanged. What a shock!
The Fed also gave an upbeat forecast of economic growth, predicting that the U.S. economy will grow 6.5% this year, its highest rate in nearly 40 years. Its December 2020 forecast projected 4.2% growth.
The Fed also expects that the economy could return to full employment next year and that inflation could hit 2.4% this year before declining again.
In effect, the central bank said they were willing to let the economy run “hot” and risk higher inflation in order to capture the benefits of stronger growth.
Zero rates are essentially a given as far as the eye can see. What about that growth forecast?