Interest rates in US, your take

[STT]

OPEC is set to raise production greatly is some story I saw today and I wondered why would they do that especially.   Most business and many nations will welcome cheap energy but why is OPEC ok with oil far below 100 dollars.  
  My first thought is Saudi is helping USA with a kind of sanction against Russia, Russia is especially reliant on oil exports to fund its loss making war so more then anyone they need a good price vs their own production costs.  USA is a vital partner for Saudi in its security and a variety of ways, the best deals are never really stated explicitly but it seems OPEC making this move is related to all the other known news at present including that trade conference.
  Trump is known to favor the lower oil and energy price and also wants cheaper rates, he got one at least and USA is large enough to be in OPEC though the production possible is not as cheap as Saudi can provide and many rigs in USA will not start or restart production until oil starts heading to 100.   There is much manipulation ongoing.

If oil is especially lower, ideally below 40 starts to alter the landscape.  Cheap energy is cheaper production and manufacturing capacity which helps Trump vision of the economy.  Nuclear takes a decade to start producing cheap power, oil is immediate.
  Lower oil is lower inflation directly via fuel costs to USA consumer and if inflation is lower Powell can drop the interest rates which would be a justification of the entire plan.

Increased Production:
OPEC+ members, including Saudi Arabia, Russia, Iraq, UAE, Kuwait, Kazakhstan, Algeria, and Oman, have agreed to increase oil production by 411,000 barrels per day in May

[BenCodie]

I read something recently explaining that the factors pointing toward even higher rates. Even this week, mortgage rates continue to inch higher (sitting at roughly 7%). In past global financial crisis', we've seen 15%+. I believe economic conditions are weak (based on long-term ongoing research) and that double the current rate is possible. It would be a disaster, though disasters tend to happen when the world decided not just to debase their currency long ago, but to print it excessively.

[philipma1957]

Trump has been lately calling repeatedly Jerome Powel, chair of the fed, Mr. Too Slow.

It's time we don't take Trump seriously again, he has demonstrated himself to be tyrannical, egotistic and controlling, everybody must see things in his ugly way and must do it, for what reason? I love what the FED under Jerome Powell is doing, and I believe every sane mind stands with him, at least those who are not in Trump's authoritarian camp.

Tell me, how do you cut the interest rate when Trump was causing uncertainty with his ignoble policies, especially the trade war with tariffs? Now, the US interest rate is increasing, is this the time Powell should cut the rate? Trump should go back to his economics and leave the lawfully autonomous body alone to do their job. Everything mustn't be about how Trump wants it.

Dude he is Donald fucking trump

His big beautiful bill passed the house today.

He’s winning as people are following his lead.

Basically the world is very literally changing to the will of the Donald.

It means he will likely get what he wants.

[pooya87]

And nobody really feels bothered by it, they just live like that, or they have no idea to riot or rebel, the military itself is questionable one here, in most of other nations, military is the one that takes over, and then gives democracy. I do not know their customs or cultures, and if they find that to be acceptable then they deserve to live like that, but if it was my nation, I would be rebelling against a king that owns all the good in my nation.

There are 3 things that are preventing any kind of revolution.
1. The corrupt ideology that has basically brainwashed Muslims by telling them that they are not allowed to question their rulers. It states that people must accept their ruler even if he is a dictator or worse even if he is corrupt! We can see that most in other dictatorships like Bahrain.

2. Any kind of uprising has been oppressed by spy services, mostly Western and namely CIA that has protected these dictatorship to remain in power and work for US as a proxy.

3. There is no leader to be able to organize Arabs and lead any form of revolution in the Arabian peninsula. Anybody who had that potential has been either eliminated or imprisoned over the past years.
This is why many Arabs say Arabia need a Khomeini (leader of Islamic Revolution in Iran who overthrow the dictatorship that was installed and backed by the West back in 1979)... It is worth mentioning that in Islamic Republic of Iran, the leaders are elected by the people and are working under supervision of a committee of experts (elected by the people) and will be removed immediately if they no longer have the principals necessary to be a leader.

Where did Trump say that?

https://edition.cnn.com/2018/10/03/politics/trump-saudi-king-intl

and US keeps doing whatever Israel demands,

The Zionist regime is their proxy and also there is deep Zionist infiltration inside US to the point that almost all the decision makers in US are chosen by the Zionist lobby AIPAC.

So don't think of Israel and US as different entities. They are one. The atrocities the Israeli terrorists are committing are nothing that US regime itself hasn't done.

Sure what Hamas did on October 7th is insane

What the Resistance in Gaza did in Operation al-Aqsa Storm was a perfect military operation that is categorized as a preemptive strike since they found out that the Zionist occupiers of Palestine were planning to invade Gaza and do exactly what they have been doing so far (ie. carrying out a genocide). So the Resistance hit the enemy's genocide machine hard and took their soldiers prisoner to improve their own position in the war that was coming.

That hit crippled the Zionist genocide machine specially since the Resistance eliminated key Zionist generals and spy masters from unit 8200. If it weren't for US regime's direct military intervention, Israel would not have existed today.

[The Sceptical Chymist]

I'm no economist by any means, nor do I trust the "expert" talking heads blabbering on in the mainstream financial media, but I heard a good case for stagflation hitting the US and so I tend to think that's going to be the miserable outcome of all these years of really bad fiscal policy.  I think inflation is almost a given (assuming Trump is serious about the tariffs he's been proposing and he implements them); what I'm not sure about is the stagnation part.  Is the economy stagnating?  Not so much at present that I can tell, but things could change very quickly.

One thing that I'm concerned about is what happens to the stock market once interest rates drop.  We've been in the longest bull market ever already, and low interest rates tend to increase speculation and the use of leverage by the big investors, hedge funds, and the like.  Trump could be setting the market up for the crash that a lot of us have been expecting for years now--I mean, how overvalued can the market get before it starts getting its bearings and those big investors realize it and take their profits off the table?  I'm not trying to spread FUD.  It's just concerning to me.

[EarnOnVictor]

Trump has been lately calling repeatedly Jerome Powel, chair of the fed, Mr. Too Slow.

It's time we don't take Trump seriously again, he has demonstrated himself to be tyrannical, egotistic and controlling, everybody must see things in his ugly way and must do it, for what reason? I love what the FED under Jerome Powell is doing, and I believe every sane mind stands with him, at least those who are not in Trump's authoritarian camp.

Tell me, how do you cut the interest rate when Trump was causing uncertainty with his ignoble policies, especially the trade war with tariffs? Now, the US interest rate is increasing, is this the time Powell should cut the rate? Trump should go back to his economics and leave the lawfully autonomous body alone to do their job. Everything mustn't be about how Trump wants it.

Dude he is Donald fucking trump

His big beautiful bill passed the house today.

He’s winning as people are following his lead.

Basically the world is very literally changing to the will of the Donald.

It means he will likely get what he wants.

Yes, of course, he is Donald, F*cking Trump, everyone must bend the knees, right?

But I dare him, he should have continued with the tyrannical ego he started with and let's see what damage he would have caused to himself and the United States. Why is he reconsidering his policies and soften many executive orders? If not that he has seen himself and the US being driven into the abyss.

[Smartprofit]

Here, in my opinion, it is necessary to understand that the reduction of the Fed's interest rate is a medicine for the economy.

And like any medicine, it is used only if a serious problem in the economy has been diagnosed. This medicine is not used just like that. Because if it is used just like that, then when there is a real strong need to use it, it will be impossible to use it. Now the Fed's management consists of very conservative financiers who avoid all sorts of adventures and sudden movements. Therefore, in my opinion, they will not reduce the Fed's interest rate.

After all, there is no particular need for this. The story with tariff duties seems to be ending. The US economy is in better shape than the economy of the European Union, Russia or China.

In this situation, there is no reason to reduce the Fed's interest rate, moreover, under certain economic scenarios it may even be slightly increased (such a development of events cannot be completely ruled out either).

My view is a bit of the opposite. Actually raising interests rates is the medicine that needs to be applied when the inflation gets too high. Otherwise, and provided there is no reasonable risk of deflation, the best course is to have cheap money and allow the economy to grow as much as possible - again, if there is no risk of inflation.

There is no limit to how much you'd want the economy to grow as long as it does not overheat.

Yes, raising interest rates is usually used to “cool down” an “overheated” economy.

This is because the interest rate of the Central Bank or the Federal Reserve is the rate at which the Central Bank or the Federal Reserve lends to commercial banks. Accordingly, commercial banks issue loans to commercial organizations at a higher interest rate. Thus, if the Central Bank or the Federal Reserve raises the interest rate, commercial organizations will be forced to cut back on all their investment programs. This will “cool down” the economy.

Currently, the US economy does not need such financial measures. However, who knows what will happen in the future?

Some economists believe that the era of near-zero interest rates is already in the past.

[takuma sato]

With the recent tariff tamtrum of Trump against the EU by raising 50% of tariffs against all EU goods, we are seeing why Powell never lowered interest rates: You cannot trust Trump since he will be using the tariff card to force negotiations for the duration of his term, which means the next 4 years will be quite unpredictable, and that is the last thing Powell wants since he cannot gamble and get rates lower, only to have Trump raise tariffs which will mean manufacturers translate this tariff cost into the final price, that is, the consumer will pay. I already saw how iPhones may go up like $300 only with the current China tariffs, so we will see if those 50% EU tariffs stay. Im assuming its just the usual trumpings so we will get a good buy the dip opportunity then we fly again.

[Fortify]

Trump has been lately calling repeatedly Jerome Powel, chair of the fed, Mr. Too Slow.

And from his point of view this is true. Ideally, Trump would need the lifeline of an interest rate cut - that would help many people with debt in the US and the business in general - not to mention the battered stock markets.

However, JP seems to think that there is no hurry in lowering the rate, since the economy is working well and there is no risk to employment at the moment.

The underliying issue seems to be if tariffs will be inflationary (despite Trump saying that other countries will pay them, they are likely to end in the final price paid in the US). There may be long term gain, but the short term Pain seems guaranteed.

Another problem is the level of investment in the US. Trump is also saying that he is on a tour to get the rich of the world investing in the US. If that is just marketing or real, the fact is that some companies will invest in the US - which means more money into the economy, which means... inflationary pressure.

How will this play out? Will inflation be contained, rates lowered? Could we be heading for stagflation? Is the future pinkish?

As an investor, you always have to be looking out for where value is found in the market at any particular moment - right now the bond market is looking extremely good from that perspective. If you've been watching different asset classes over a longer timeframe, you'll often see that they work in cycles, which can be very long or very short. American politics has been very erratic since the latest president got in and are likely to stay volatile for the next few years, but in the long term it is a very innovative and productive country that will continue to prosper after he has gone. It is very unlikely that bondholders of US treasuries will ever be defaulted on, so they are near zero percent risk compared to stocks and can help make any portfolio a bit more stable. It's buy, buy, buy time for me