There’s no such thing as a sure thing in markets, but some things come pretty close. One of them is the proposition that there will be more interest-rate cuts next year — and another is that these reductions will have little to no effect on long-term rates.
First, about the cuts. Federal Reserve Chair Jay Powell may have presided over his last announcement of a decrease, but odds are his successor will reduce rates further next year. It’s not just that President Donald Trump wants lower interest rates, which boost the stock market and consumer borrowing, and make servicing the national debt cheaper. It’s that there are financial risks in the current environment, in which rates are high after a long period of being exceptionally low: Getting rates back down may help the US avoid a credit crisis.
Continue reading the entire piece here at Bloomberg Opinion (paywall)
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Allison Schrager is a senior fellow at the Manhattan Institute and a contributing editor of City Journal.
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