Until recently, most financial experts expected the Federal Reserve would begin raising interest rates around mid-2015.
But in recent days, the slowdown of global growth and the concern expressed by Federal Reserve officials that this sluggishness will spill over to the United States have led many experts to push back the expected date.
"I think we’re approaching an ‘aha’ moment, when investors realize that growth isn’t going to emerge in the months ahead," Doug Kass, president of hedge fund manager Seabreeze Partners Management, told The New York Times.
"The central banks have blunt tools, and they’ve reached the limit of what they can do. As Peggy Lee put it, 'Is that all there is?'"
So Kass sees bond yields continuing to fall, and he sees the Fed standing put. "People are losing sight of the fact that the Fed hasn’t raised rates since June 2006," he said. "I don’t see them raising rates for two or three more years. That will be another surprise for the markets."
The Fed has kept its federal funds rate target at a record low of zero to 0.25 percent since December 2008.
Meanwhile, the central bank should resist calls for another round of quantitative easing (QE4), says Mohamed El-Erian, former CEO of Pimco. "It [the cry for QE4] is so predictable yet also so unfortunate," he writes in the Financial Times.
"The hurdle for such a policy step is high, and it should be if it is not accompanied by a more comprehensive policy response out of Washington."
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