Question

What is the current and future trajectory of the FED's monetary policy in your opinion? Why? Explain.

Answer 1

In my view, the Fed will continue aggressive on the potential rate hikes and is expected to do three interest rate hikes this year which will frame the current monetary policy because Fed is worried about the potential risk of asset bubble and declining returns on long term assets such as pension investments. Going forward, from 2020, I think Fed will slow down its pace of rate hikes and we might see only 1-2 interest rate hikes in 2020. For 2021 and next few years, I think the Fed will take pause on interest rate hikes. The Fed will not raise beyond 2020 because any further rate hikes after 2020 might reduce the economic growth which does not seems feasible given its impact on employment and income levels.

the above is answer..