31–40 of 319 posts
Does this interest rate transfer to lower mortgage rates? Is now a good time to refinance loans?
No. This is a rate for banks only. You get the rate banks pass on to consumers, which is obviously higher, because they need to make money.
For the same reason, I expect margin interest to drop by the same amount.
Not only that but they've removed the reserve requirements entirely for "thousands" of banks. There are only ~4500 commercial banks in the USA total. So that's at least a good fraction of them. These banks can now create money out of nothing as much as they want.
Anyway, reserve requirements are generally not effective, including in the USA. Much has been written about this. Banks are usually not reserve constrained (especially post QE), there are many ways to game reserve requirements, there are many ways to get reserves when you need them, and central banks increase reserves systematically when they are in demand via interest rate mechanisms.
[1] https://en.wikipedia.org/wiki/Reserve_requirement#Countries_... [2] https://en.wikipedia.org/wiki/Basel_III [3] http://www.kreditordnung.info/docs/S_and_P__Repeat_After_Me_... [4] http://bilbo.economicoutlook.net/blog/?p=9075 [5] http://macromusings.libsyn.com/marc-lavoie-on-canadian-centr...
The Fed can, and will do much, much more. The signal here should be read as "whatever it takes to avoid a depression." Among other steps, this is likely to mean: - Negative-yielding long-term treasuries - Direct purchase of stocks or ETFs, which would require congressional approval. Expect the discussions to start soon. The steps already taken and the ones to be taken will create financial manipulation on a scale nev…
They've already lost it. It's clear they're scrambling. You can't print your way out of this is the lesson we KNEW from '08.
Not only that but they've removed the reserve requirements entirely for "thousands" of banks. There are only ~4500 commercial banks in the USA total. So that's at least a good fraction of them. These banks can now create money out of nothing as much as they want.
Do you have a source for this? That doesn't appear to be the case at least according to the Fed's website ( https://www.federalreserve.gov/monetarypolicy/reservereq.htm ), which shows the most recent change to the requirements being in January - setting it at 3% for large banks.
Start of paragraph 4.
Not only that but they've removed the reserve requirements entirely for "thousands" of banks. There are only ~4500 commercial banks in the USA total. So that's at least a good fraction of them. These banks can now create money out of nothing as much as they want.
Do you have a source for this? That doesn't appear to be the case at least according to the Fed's website ( https://www.federalreserve.gov/monetarypolicy/reservereq.htm ), which shows the most recent change to the requirements being in January - setting it at 3% for large banks.
last item, heading is "Reserve Requirements"
"... the Board has reduced reserve requirement ratios to zero percent effective on March 26"
The Fed can, and will do much, much more. The signal here should be read as "whatever it takes to avoid a depression." Among other steps, this is likely to mean: - Negative-yielding long-term treasuries - Direct purchase of stocks or ETFs, which would require congressional approval. Expect the discussions to start soon. The steps already taken and the ones to be taken will create financial manipulation on a scale nev…
Edit: S&P futures limit down at 5:15.
Does this interest rate transfer to lower mortgage rates? Is now a good time to refinance loans?
It will, but not just yet. There’s too many people trying to refi right now and supply can’t keep up with demand, so rates are higher than they should be. Give it another 3-6 months and I wouldn’t be surprised if mortgage rates fell by another 1%.
The Fed can, and will do much, much more. The signal here should be read as "whatever it takes to avoid a depression." Among other steps, this is likely to mean: - Negative-yielding long-term treasuries - Direct purchase of stocks or ETFs, which would require congressional approval. Expect the discussions to start soon. The steps already taken and the ones to be taken will create financial manipulation on a scale nev…
Interesting that S&P futures have fallen 3% as of 5:00pm in Asia. Are markets interpreting this less as the Fed signaling it will do whatever it takes and more as the Fed is panicked and the financial system is under a huge amount of pressure behind the scenes? Edit: S&P futures limit down at 5:15.
This is not going to help - It takes two years for monetary supply changes to fully propagate through the economy - Cutting rates to 0% has not been effective in Japan or Europe The fed does have a role to play here - They can provide liquidity to the market - They can serve as a backstop in a time of crisis DC needs to get their shit together - Eliminating Trump's tariffs would do more to increase long-term investme…
As someone said before, I think this is more about sending a message, as in "we're going to do whatever it takes". To be honest I don't know what the future will hold from a financial/economics point of view, but imho this is an once-in-a-century crisis.
I am very skeptical about cutting rates again. There are much more effective actions that could be taken at the policy level. The fed is doing what it can, but it doesn't have the right tools to lead the charge on this.
Earlier quoted context omitted.
Do you have a source for this? That doesn't appear to be the case at least according to the Fed's website ( https://www.federalreserve.gov/monetarypolicy/reservereq.htm ), which shows the most recent change to the requirements being in January - setting it at 3% for large banks.
Sorry. I should have included that. https://www.cnbc.com/2020/03/15/federal-reserve-cuts-rates-t... Start of paragraph 4.