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Exclusive – Vivek Ramaswamy: Slash Federal Reserve by 90 Percent, Use Growth to ‘Unleash America’

by www.breitbart.com Leave a Comment

Republican presidential candidate and entrepreneur Vivek Ramaswamy told Breitbart News in an exclusive interview that slashing the Fed and unleashing growth is the key to getting out of the banking crisis.

Ramaswamy spoke to Breitbart News as the banking crisis continues to unfold, leaving many to wonder how America can get out of this situation.

As the world becomes increasingly engulfed in economic turmoil, Ramaswamy said he remains the only presidential candidate that has highlighted the Fed’s deep flaws that have led to the current economic uncertainty.

The American entrepreneur said that reforming the Federal Reserve — or slashing 22,000 employees at the Fed and severely narrowing the Fed’s duties — will help prevent future banking crises like the one America is currently experiencing.

He said the Federal Reserve has wrongly tried to play “God” by trying to hit two targets with one arrow by tackling both unemployment and inflation, describing it as a “disastrous” 25-year experiment. He said that the Fed should solely focus on stabilizing the American dollar than tackle too many economic issues at the same time.

Ramaswamy contended that the Fed relies too much on the alleged Phillips curve, which he said is based on a “flawed premise” and old historical data that does not apply to the modern American economy. The Phillips curve holds that there is a trade-off between inflation and employment: if unemployment goes too low, inflation is likely to go too high. Policymakers, especially at the Fed, are often implicitly using the Phillips curve when they say they need to reduce demand for workers to fight inflation.

Many lawmakers, including Sen. John Kennedy (R-LA), have questioned the need to raise unemployment rates to curb inflation:

Senator John Kennedy / YouTube

Ramaswamy also blamed the Fed for using lagging indicators of the boom-bust business cycle, such as wage growth, meaning that they may not be using data that would allow the Fed to see how the economy is adapting to higher interest rates in real time or anticipate changes not yet in backward looking data.

This has led many, including former Federal Reserve chair Ben Bernanke, to say that the Fed was slow to raise interest rates when inflation started to rapidly increase.

Now that the country appears to be entering another period of economic turmoil, Ramaswamy says that “reform of the Federal Reserve is critical.”

He said, “I’m going to, for that reason, restore its mission to a single purpose and you don’t need 22,000 employees to do it. You need way less than 2,000. That means over 90 percent headcount reduction there.”

Ramaswamy pivoted, saying the country needs to focus on ways to stimulate the economy in major ways rather than “quibbling” over spending increases, tax increases, or spending cuts.

“There’s an anti-growth movement in the country and part of the left that says, ‘You should learn to live with less.’ That’s what the climate cult is all about,” he explained, and that we need to “unleash American energy.”

He said that the country needs to put “people back to work” and remove “incentives” not to work. He said that Americans could easily get subsidies to become a gender studies major, but many may not have the resources to become a welder or a construction worker.

Ramaswamy said that America is “starving” for economic growth that will get America out of the current crisis and put Americans back to work.

He explained, “Broadly speaking, abandon the climate continental issue with energy and put people back to work by stopping giving them market-distorting incentives not to work and that I think are to be combined with Federal Reserve reform actually is a path to restoring GDP growth in this country, so that we don’t have to argue about small ball from entitlement cuts to tax increases about how we deal with our deficit, but actually restore growth, which in turn is actually our best way out of our other economic issues as well. No other candidate’s talking about it. I am the leading pro-growth candidate in this race. And I think that pro-growth economic agenda is something that I think the country is starving for, and I’m going to deliver it.”

Watch Breitbart News Editor-in-Chief Alex Marlow’s interview with Ramaswamy on “Woke Capital” here:

Matt Perdie / Breitbart News

Sean Moran is a policy reporter for Breitbart News. Follow him on Twitter @SeanMoran3 .

Majority of Economists Expect U.S. Economy Will Fall Into Recession This Year

by www.breitbart.com Leave a Comment

The U.S. economy is expected to fall into a recession later this year, said a majority of economists surveyed in an influential semi-annual poll.

Fifty-eight percent of economists said they expect the economy to be in a recession to begin this year, according to the National Association for Business Economics (NABE) Policy Survey .

The largest share—24 percent—said they expect the recession to begin in the third quarter of this year. Sixteen percent said they expect the recession to begin in the second quarter, which begins at the end of this week as April starts. Another 13 percent said the recession will begin in the fourth quarter of this year.

Five percent said they believe the economy is already in a recession. That’s down significantly from the 19 percent who expressed the view that the economy was currently in a recession when asked in the August survey.

Twelve percent expect a recession to start in the first half of next year. Twenty-two percent said they expect no recession until the second half of next year or later.

“More than half of NABE Policy Survey panelists expect a recession at some point in 2023,” said NABE President Julia Coronado, president and founder, MacroPolicy Perspectives LLC.

There is widespread agreement that inflation will not come down to the Federal Reserve’s two percent target without a recession. More than two-thirds—69 percent—said they are “not very confident” or “not at all confident” that the Fed will be able to bring inflation down to the target in the next two years without inducing a recession.  That includes 43 percent who are “not very confident” and 26 percent who are “not at all confident.”

Twenty-three percent said they are “somewhat confident” that inflation will come down without a recession. Just four percent described themselves as “confident” of that outcome and three percent as “very confident.”

More than seven in ten panelists believe that growth in the consumer price index will remain above 4 percent through the end of this year. Twenty-six percent said over four percent inflation through the end of the year is “very likely” and 45 percent said this is “likely.”

Twenty-seven of the economists surveyed suggest that CPI inflation is “unlikely” or “very unlikely” to remain above 4% through the end of 2023.

“Panelists generally agree on the outlook for inflation and the consequences of rate hikes from the Federal Reserve,” added NABE Policy Survey Chair Mervin Jebaraj, University of Arkansas. “More than seven in ten panelists believe that growth in the consumer price index (CPI) will remain above 4 percent through the end of 2023, and more than two-thirds are not confident that the Fed will be able to bring inflation down to its 2 percent goal within the next two years without inducing a recession.”

Despite this, economists have a far better opinion about Fed policy than they did last year. Fifty-eight percent say they view current monetary policy to be “about right,” up from 46 percent in August and 22 percent a year ago. Twenty-six percent said monetary policy is too accommodative, down from 44 percent in August and 77 percent a year ago. Fourteen percent say policy is too restrictive, up from nine percent in August and none in March of 2022.

On the other hand, the share of economists who say fiscal policy is too stimulative continued to rise. Fifty-three percent said fiscal policy is too stimulative, up from 51 percent in August and 50 percent last March. Forty-one percent view fiscal policy as about right, down from 44 percent in the two prior surveys. Five percent said fiscal policy is too restrictive, up from three percent in August and four percent last March.

RBI to pause rate hike in April policy, maintain accommodation withdrawal stance: SBI Report

by cfo.economictimes.indiatimes.com Leave a Comment

RBI to pause rate hike in April policy, maintain accommodation withdrawal stance: SBI Report

The Reserve Bank of India is expected to pause its rate hikes in the upcoming April policy meet. The stance could continue to be withdrawal of accommodation, even as liquidity is now in deficit mode. RBI can always keep the options open in June policy , revealed a recent report by the State Bank of India .

The report further highlighted the reasons behind the possible pause in April.

There are concerns of a material slowdown in affordable housing loan market and financial stability concerns taking centre stage.

“While concerns on sticky core inflation is justified, it may be noted that average core inflation is at 5.8 per cent over the last decade and it is almost unlikely that core inflation could decline materially to 5.5 per cent and below as post pandemic shifts in expenditure on health and education and the sticky component of transport inflation with fuel prices staying at elevated levels will act as the constraint. By this logic, RBI may then have to go for more round of rate hikes,” stated the report.

Inflation data of March and April will only be known to RBI before June MPC meeting. March inflation is expected to be around 5.5 -5.6 per cent and April inflation print to be around 4.7-4.8 per cent.

“Thus, the RBI would have a delicate balancing job of either looking forward to the June meeting with clear signs of inflation trending downwards or look backwards at the Jan and Feb prints in April policy. Thus, it will be a delicate choice,” the report stated.

Federal Reserve and ECB rate outlook

Moderate pace of rate hike expected from the Federal Reserve, possibility of one more rate hike of 25 basis points expected.

The balancing of liquidity in the US banking system to feed into policy stance thus balancing stability and inflation objectives. The stress in financial system is in early stage and can be contained.

The European Central Bank (ECB) is expected to keep the stance as tightening as crisis in Swiss banking is now contained.

Possible resolution of Russia-Ukraine Conflict can alter the path of policy rates. There’s an uncertainty in the rate hike possibility by ECB yes there can be a rate hike next of approximately 25 basis points, highlighted the report.

Why you should put your money in a CD right now

by www.sfgate.com Leave a Comment

The Federal Reserve raised interest rates by a quarter point on March 22, following nearly two weeks of speculation amid turmoil in the banking industry . That brings the benchmark borrowing rate for federal funds to between 4.75% and 5%.

However, it may be a turning point in the Fed’s fight against inflation: The Federal Open Market Committee maintained its projection for the terminal rate — that is, the highest the federal funds rate will go — at 5.1% by the end of 2023. That would mean just one more rate hike before the end of the year, with the expectation that the Fed will begin cutting interest rates in 2024.

The Fed’s historic series of rate hikes — nine consecutive increases over the past year — has been excellent news for savers . Interest rates on certificates of deposit (CDs) and high-yield savings accounts are at their highest levels in nearly 15 years. Short-term CDs, those with terms of 1 year or less, have had the best returns, with some topping 5%. Meanwhile, interest rates on some high-yield savings accounts are upwards of 4%.

By keeping its projection for the terminal rate steady, however, the Fed is signaling that its campaign of rate hikes may be coming to an end. If that’s the case, interest rates on savings vehicles have probably peaked. That’s why if you’ve been considering moving your money into a CD, this is the moment to lock in the best rates in recent memory.

The Federal Reserve doesn’t set interest rates on CDs or other consumer financial products, but its actions have an effect on them. When the federal funds rate goes up, banks tend to raise interest rates on deposits like savings accounts and CDs as a way to attract more customers.

Interest on savings accounts has risen more slowly this past year than conventional wisdom would suggest. But it’s still more than tripled since the Fed started its push in March 2022. As of March 22, the national average interest rate for savings accounts is 0.23%, consistent with the previous week, according to Bankrate’s weekly survey.

If you’re looking for the greatest return, online banks tend to offer much better interest rates than traditional banks — in some cases, thousands of times higher. Short-term CDs — those that lock your money in place for a year or less — have the best returns right now, with some interest rates topping 5%. They’re an excellent option if you plan to leave your money in place for a while. The most fruitful high-yield savings accounts, on the other hand, are offering interest rates upwards of 4%. Most high-yield savings accounts provide the same accessibility as traditional savings accounts , such as the ability to easily transfer money to a checking account . They’re a great match for people who need flexibility with their funds.

When you commit to a CD, the bank is also making a promise: that it will honor the same interest rate for the length of the term. Terms typically range from one to five years (though you can find CDs with terms as short as three months). In most cases, you’ll find the best interest rates on CDs with longer terms, though as previously mentioned, at the moment many of the best rates are on 1-year CDs.

Once you put your money in a CD, you must leave it there for the length of the term or you’ll have to pay a fee for taking it out early (known as an early withdrawal penalty). You also can’t add to it once the term starts. So before locking any of your money in a CD, you’ll want to be certain you can afford to part with it for that long. That’s why most people will have a mix of CDs and savings accounts, which let you withdraw money when you need it.

CDs are a low-risk way to grow your savings, aside from the risk you might incur by locking your money in one place for a specific length of time. CDs are insured up to $250,000, as long as they’re with a bank that’s insured by the Federal Deposit Insurance Corp. (FDIC) or a credit union insured by the National Credit Union Administration.

Once your CD matures (that is, reaches the end of its term), you will typically have seven to 10 days to decide what to do next. You can renew the CD at the current rate, withdraw the money, or move it to another account or CD. If you do nothing, most banks will renew the CD for the same term but at the current rate, which might be higher or lower than the rate when you originally took out the CD.

In a press conference after the March 22 rate hike, Fed Chair Jerome Powell declined to say whether the FOMC would impose more rate hikes in 2023, in light of the economic turbulence created by the Silicon Valley Bank collapse.

“It is too soon to determine the extent of these effects and therefore too soon to tell how monetary policy should respond,” he said. “As a result, we no longer state that we anticipate that ongoing rate increases will be appropriate to quell inflation; instead, we now anticipate that some additional policy firming may be appropriate.”

Powell said that the FOMC “considered” holding off on an increase this month in response to the banking crisis. But ultimately they decided that another immediate rate hike was necessary to further curb inflation.

“Inflation remains too high, and the labor market continues to be very tight,” he said. “Price stability is the responsibility of the Federal Reserve. Without price stability, the economy does not work for anyone.”

Since the FOMC’s last meeting, inflation indicators haven’t provided a clear path forward for the Fed. Prices of goods and services rose 6% in February over the previous year, a small decline from the 6.4% increase in January, according to the Consumer Price Index report released March 14.

Employment , meanwhile, remains strong, with 311,000 new jobs created in February, according to the jobs report released March 10. Unemployment, however, ticked up slightly to 3.6%, higher than the expected 3.4%, showing that the labor market might be starting to soften.

Then there’s the instability thrust into the economy by the banking crisis. The Fed is also likely to begin facing greater pushback from Congress in the coming months. Senate Majority Leader Chuck Schumer said after the Fed’s March 22 announcement that he was “concerned about [the latest hike’s] effect on the economy.”

The upshot for consumers: If the Fed sticks to its projections for the terminal rate, there’s a decent chance that CD rates are as good as they’re going to get for this rate hike cycle. If you’ve been sitting on the fence about opening a CD, it’s a great time to lock in an excellent rate for the next year.

Editorial Disclosure : All articles are prepared by editorial staff and contributors. Opinions expressed therein are solely those of the editorial team and have not been reviewed or approved by any advertiser. The information, including rates and fees, presented in this article is accurate as of the date of the publish. Check the lender’s website for the most current information.

This article was originally published on SFGate.com and reviewed by Jill Slattery, who serves as VP of Content for the Hearst E-Commerce team. Email her at [email protected]

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Will CD rates go up in 2023?

by www.sfgate.com Leave a Comment

The early months of 2023 have been a boon for savers: The best interest rates on certificates of deposit (CDs) have topped 5%, the highest they’ve been in about 15 years. Since CDs require a commitment, however, that leaves many wondering: Will CD rates go up even more in 2023? Or have they hit their peak? The answer depends on where the economy goes as well as what happens in the banking system.

An interest rate is nothing more than the price of money, and like any price, it’s determined by supply and demand. The more that consumers, businesses and governments want to borrow money, the higher rates will go. The more that people want to save, the lower rates will go. Of course, the Federal Reserve system can give rates a nudge to help manage the economy.

What are today’s CD rates?

According to Bankrate’s most recent data, the average CD rates for the week of March 15 are:

  • 1-year CD rate: 1.62%
  • 5-year CD rate: 1.24%
  • 1-year jumbo CD rate: 1.71%
  • 5-year jumbo CD rate: 1.30%
  • Money market account rate: 0.31%

If you’re willing to shop around, however, you may find higher rates, especially if you consider online banks , which tend to pay more interest.

What influences CD rates

CD rates are based in part on the federal funds rate , which is the interest rate on balances that banks hold at the Federal Reserve banks. When the central banks want to soften or strengthen the economy, they adjust the rates that they charge or pay banks in the system. The Fed has raised the federal funds rate nine times in the past year in an aggressive campaign to cool inflation. Most recently, it hiked interest rates by 0.25% on March 22, bringing the benchmark borrowing rate to between 4.75% and 5%.

Member banks then set the rates that they charge on loans and pay on savings accounts, including certificates of deposit. Considerations include the fed funds rate, whether the bank needs deposits to fund its loan portfolio, and what competitors are doing. To protect member banks from overpaying to attract capital, the Federal Deposit Insurance Corporation sets a cap for less than well capitalized institutions.

Because many factors go into setting CD rates , savers find it pays to check out the offerings at multiple banks before locking their money away.

Where experts predict CD rates will go next

Several economists have made interest rates forecasts for 2023, which give some insights for the direction of CD rates.

Of course, forecasts quickly become outdated. For example, the failure of Silicon Valley Bank in early March, and the revelation of weaknesses at other banks , has increased risk in the economy. That is likely to lead to increased interest rates.

Pros and cons of CDs

Because a CD is a commitment, you’ll want to consider how it fits into your personal financial picture.

Pros

  • Higher interest rates
  • A safe, FDIC-insured way to save money
  • Fixed interest rate, so it will stay the same for the term even if the market shifts
  • You can predict how much your money will grow

Cons

  • Your money is locked in for a specific amount of time
  • There are penalties for early withdrawals
  • The fixed interest rate can turn into a negative if rates on other types of savings accounts go up during the term
  • Lower return over the long-term than you’d get from investing in the stock market

The bottom line for 2023 CD rates

The consensus for interest rates seems to be that rates are likely to be steady this year. This means that CD rates are probably as high as they are likely to be. Still, if you’re concerned about missing out, look for CDs that have no penalty for moving funds into a CD with a higher rate.

Editorial Disclosure: All articles are prepared by editorial staff and contributors. Opinions expressed therein are solely those of the editorial team and have not been reviewed or approved by any advertiser. The information, including rates and fees, presented in this article is accurate as of the date of the publish. Check the lender’s website for the most current information.

This article was originally published on SFGate.com and reviewed by Lauren Williamson, who serves as Financial and Home Services Editor for the Hearst E-Commerce team. Email her at [email protected] .

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