Tags: Schiff | Fed | rates | economy

Peter Schiff: Fed 'Has No Intention of Raising Rates'

By    |   Friday, 20 March 2015 09:30 AM

After the Federal Reserve's policy statement Wednesday, many economists extended their forecast for the beginning of Fed rate hikes to September from June.
 
They would have done better to extend it until the cows come home in the eyes of Peter Schiff, CEO of Euro Pacific Capital.
 
No rate hike is coming this year, he told Yahoo. "The Fed has been bluffing the entire time," Schiff said.
 
"It has no intention of raising rates, but it can't come clean and admit that, so it has to pretend that it is going to do something it's not going to do, so it doesn't reveal the fragility of the U.S. economy." GDP expanded 2.4 percent last year.
 
Eventually Fed policymakers will increase rates, Schiff said.
 
But they will do so "not because they want to, but because they have to, because the markets will give them no choice, because I think we will have a currency crisis. . . . It's going to make 2008 look like a Sunday school picnic."
 
The dollar has soared to multi-year highs against a range of currencies in recent weeks.
 
Meanwhile, star bond fund manager Bill Gross of Janus Capital Group says that in dropping the word "patient" from its policy statement, the Fed shifted from a patient stance to a "prudent" one on raising interest rates.
 
"The Fed expressed a lot of prudence and concerns going forward," he told CNBC.
 
"They expressed concern about the potential for inflation. They expressed concern about the potential for global weakness and international developments, which is code basically for a strong dollar. And they expressed concern in terms of the employment situation not threatening inflation going forward."
 
As a result, Gross shifted his prediction for the beginning of rate hikes to September from June.
 
In its statement Wednesday, the Fed said, "The [Fed's policymaking] Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term."
 
The Fed's favored inflation gauge, the personal consumption expenditures price index, climbed only 0.2 percent in the year through January.

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After the Federal Reserve's policy statement Wednesday, many economists extended their forecast for the beginning of Fed rate hikes to September from June.
Schiff, Fed, rates, economy
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2015-30-20
Friday, 20 March 2015 09:30 AM
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