The world needs accommodative monetary policy. The United States does not. Those are the words from Goldman Sachs economists, who warned that the central bank may have to implement four rate hikes in 2016.
According to Chief Economist Jan Hatzius and Economist Sven Jari Stehn of Goldman Sachs Group Inc, the Federal Reserve will have to raise interest rates four times this year, alluding to the U.S. economy and the lack of global economic coordination.
The report states that one of the main problems for central banks that want financial stability is that the Fed has been placed now as the “central bank for the world.” In other words, central banks follow in the footsteps of Janet Yellen and Co., similar to how European Central Bank (ECB) president Mario Draghi has aped the actions of former Fed Chair Ben Bernanke during and after the economic collapse.
“One interpretation of the recent moves by the European Central Bank and the Federal Reserve is that they represent coordinated attempt to ease global financial conditions while avoiding upward pressure on the U.S. dollar, especially against the Chinese renminbi,” the Goldman economists write.
In order to complete a balancing act to shield the U.S. from “significant overheating,” boost wages, maintain falling unemployment levels and lift inflation, it will have to undergo four rate hikes.
“If we are right, the Fed’s willingness to keep policy easier for longer in the name of global policy coordination is likely to be short-lived and the funds rate will rise significantly further than currently discounted in the bond market,” they added.
The U.S. economy will eventually prompt the Fed, Goldman says, to be the central bank for the U.S. instead of the world.
Of course someone from Goldman Sachs is going to say raise interest rates. They will make even more money off the sheeple who use credit and their other services. DAH!