Peter Schiff thinks Fed rates will keep falling to zero and maybe even go into negative territory.

Peter Schiff put forward his view on the economy, Fed monetary policy and politics in his latest media appearance.

“No matter what Jerome Powell is saying, the Fed central bank isn’t finished with rate cuts” he said. 

In 2019 the Fed cut rates for a third time to a range of 1.5 to 1.75 percent.

Fed monetary policy has taken a 180 U-turn where in late 2018 Fed Chair Powell signaled that the bank would move to a normalization policy. But a sharp stock market decline in December 2018 forced the Fed to abandon further cuts and revert back to monetary easing.

No matter what Jerome Powell is saying, the Fed central bank isn’t finished with rate cuts

PETER SCHIFF

Peter Schiff believes Fed rates will keep falling, despite Fed Chair Powell saying the contrary

“No, they’re not done until they get to zero, and then we’ll see if they’re done or if they want to try to go negative” said Peter Schiff.

“What the Fed has assured the markets is that under no circumstances will they raise rates, added Peter Schiff.

Peter Schiff believes that the Fed rates will keep falling, which is the main reason why stocks rallied into 2019. In short, investors are buying the ‘Powell Put,’ they are factoring in no rate hikes. 

“I think that’s the only reason that the stock market has rallied. It’s based on that ‘Powell Put,’ where the fear of a rate hike is no longer in the market” said Peter Schiff. 

they’re not done until they get to zero, and then we’ll see if they’re done or if they want to try to go negative

PETER SCHIFF (on Fed rates)

When the next economic downturn becomes impossible to ignore Peter Schiff believes that the Fed rates will keep falling

“But I do think at some point next year, the economy will be weakening, or maybe we will get a sell-off in the stock market, and the only way for the Fed to try to prop the market back up would be to start doing more rate cuts,” and he added, “they will supply them as soon as the market demands them”. 

There are a lot of boasts that Trump had but the only thing he can claim credit for is a record high in the stock market” – Peter Schiff

Political instability could be another reason why Peter Schiff believes that the Fed rates will keep falling

Peter Schiff said it certainly looks like the House will impeach Trump. 

Peter Schiff doesn’t think it’s likely the Senate will remove Trump from office. Moreover, he doesn’t believe that President Trump is re-elected in 2020 unless the electorate keeps buying the economic spin, which will be hard to do if signs of a recession become more evident. 

“There are a lot of boasts that Trump had but the only thing he can claim credit for is a record high in the stock market” said Peter Schiff. Well, now the only thing he does care about really is the stock market and the same fake unemployment numbers that he once criticized. Because the GDP growth under Trump is not measurably different than it was in Obama’s second term” he added. 

So Peter Schiff thinks Fed rates will keep falling to zero and maybe even follow the Bank of Japan, The European Central Bank into negative territory.