The general strategy since the Coronavirus outbreak and the lockdown has been to reduce the interest rate to attempt to compensate for the lost economic growth or simply to avoid recession. I can't see the interest rate increasing unless there is a large increase in inflation. That is the typical response of central banks when inflation occurs because it makes outstanding base rate linked debt repayments higher, which has a dampening effect on the economy.
If it is the general or commercial interest rates that are based on risk, then yes they are likely to rise. However the base rate of interest that the central bank sets is likely to remain low to help support the economy through the turmoil of the Coronavirus. If the base rate remains low, commercial lenders will be able to offer lower rates of borrowing that can be used to either bridge the more expensive high risk loans or to buy them out with the lower rates offered by the central bank's expanded low borrowing interest loans. The central bank could perform Open Market Operations to buy risky assets the commercial banks have on their balance sheets in exchange for cash. The central bank will hold on to the risky assets until the market recovers and the assets values increase. The commercial bank that now has cash in exchange for the risky assets it used to hold can lend the cash out at low interest rates, which will make the economy stabilise again. This is the process of Qualitative Easing, where risky assets have been taken on by the central bank.
You went from smart to political real-quick. Dem sweep leads to the greatest economic outcome. The best results would be dem sweep in 2020, and republicans controlling the senate in 2022.
I agree on the premise that as long as Joe Biden is President (alive), he will stonewall anything truly progressive.
Let’s hope the entire generation of old politicians move on for younger & more pragmatic people to take their place.
Once elected almost all pols wingnutty right or wingnutty left move to the center, if only slightly, on most issues - excluding the hot button ones such as abortion & guns. Anyway Fed, Covid and economy will determine rates. Not Sleepy Joe.
I’d say yes normally, except for 2016. But I think part of that was sunk cost fallacy — reps were forced to stand by their man, despite being an obvious poor choice. Here’s to hoping for mean reversion of polarization...