Tags: Schiff | Fed | rate | hike

Euro Pacific's Schiff: No Fed Rate Hike Is Coming, But QE4 Is

By    |   Wednesday, 18 March 2015 12:30 PM

While most financial market participants are trying to figure out whether the Federal Reserve will begin raising interest rates in June or later this year, Peter Schiff, CEO of Euro Pacific Capital, sees the equation quite differently.
 
For months he has been saying that the Fed won't increase rates and that it will launch a fourth round of quantitative easing (QE). And Schiff isn't backing down from that view now.
 
"I think the Fed is more likely to launch QE4 than it is to raise interest rates," he tells CNBC
 
"Wall Street is looking for the Fed to take [the word 'patient'] away [from its policy statement,] because the Fed wants to maintain the pretense that they are actually going to raise rates, but I don't think that's going to happen at all."
 
It's all about the economy, Schiff explains. "The U.S. economy is sicker than ever, and the Fed is going to launch QE4 for the same reason they launched QE3, 2 and 1," he notes.
 
"They're going to try to stimulate the economy. Now that they stopped QE, the air is coming out of this bubble," Schiff adds.
 
"I think without QE4, we will be back in recession. It's going to be horrible. There's going to be a worse financial crisis than 2008. . . . I'm not saying the sky is falling. But the U.S. economy is in a lot of trouble and we haven't recovered from anything thanks to the Fed."
 
Economic growth decelerated to 2.2 percent in the fourth quarter from 5 percent in the third, and many economists expect growth to slow further in this quarter. But the economy did expand 2.4 percent for all of 2014, its fastest rate since 2010.
 
The Fed has kept its federal funds rate target at a record low of zero to 0.25 percent since December 2008.
 
Meanwhile, Fortune Senior Editor Stephen Gandel offers several reasons why the Fed "is not going to raise rates anytime soon (or at least not as soon as June, or even this summer)."
  • "The job market is weaker than it looks." he writes. Average hourly wages rose only 2 percent in the 12 months through February. And the labor participation rate totaled only 62.8 percent last month, barely above the 37-year low 62.7 percent.
  • "A strong dollar will slow exports." The greenback has risen to multi-year highs against a range of currencies in recent weeks. An ascendant dollar hurts U.S. exports and corporate earnings.
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While most financial market participants are trying to figure out whether the Federal Reserve will begin raising interest rates in June or later this year, Peter Schiff, CEO of Euro Pacific Capital, sees the equation quite differently.
Schiff, Fed, rate, hike
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2015-30-18
Wednesday, 18 March 2015 12:30 PM
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