Marc Faber & Peter Schiff: Federal Reserve won’t raise interest rates

Will she or won’t she? That has been the question put forward since autumn.

Federal Reserve Chair Janet Yellen has been evasive in her language as to whether or not the United States central bank will finally raise interest rates this summer. Even establishment economists and financial analysts are perplexed as polls continue to show that a large number expect a rate increase either next year or not at all.

Marc Faber: No rate hike amid weak data

Marc Faber, the editor and publisher of the Gloom, Boom & Doom Report, is in the camp that the Fed won’t be hiking rates anytime soon as he thinks the central bank will keep markets waiting. The Federal Open Market Committee (FOMC) will issue a statement Wednesday and Yellen will hold a news conference shortly after.

Speaking in an interview with CNBC’s “Squawk Box” on Wednesday, Faber alluded to recent weak economic data and a stronger dollar as reasons why Yellen won’t pull the trigger on a hike.

According to Faber, any adjustment in the federal funds rate – an interest rate for when one bank lends to another financial institution – wouldn’t come with much meaning until it touches three percent. Right now it stands at zero percent and observers expect the Fed to boost rates in increments of a quarter of a percent.

Overall, Faber believes the zero percent interest rate policy adopted by central banks all over the world has “grossly distorted financial markets and misallocated capital.”

Peter Schiff: QE4 is the next step

Will the Fed introduce a fourth round of quantitative easing? Peter Schiff, CEO of Euro Pacific Capital, thinks that is where the U.S. is heading to right now, according to a recent interview with Benzinga.

Schiff believes it’s likely that the Fed will eliminate the term “patient” from its statement. But even if they do then it’s probably going to be interchangeable with another word that still refers to them being as patient.

Essentially, says Schiff, the central bank has no intentions of boosting rates because they can’t, adding that doing so could spark another financial crisis. Moreover, the Fed needs to perpetuate the false notion and illusion that it has some sort of exit strategy, and removing “patient” is part of that strategy.

The Fed is simply biding its time until it unleashes QE4. “Everybody is operating on this false premise that we have a legitimate recovery and the Fed is going to raise rates. In fact, we have a bubble and not only will the Fed not raise rates, they will blow more air in the form of QE4.”