Kudlow: Fed's T-bill purchases are "basically" QE

Kudlow says that the Fed should cut interest rates and that he Fed's T-bill purchases are "basically" QE.
The dots indicate the Fed's neutral bias and the US dollar is consolidated in the main, although US yields are pressured.

Larry Kudlow, Director of the National Economic Council and President Donald Trump's top economic adviser is at the forum of World Economic Forum on Tuesday, a gathering of government and business leaders is held in snowy Davos, Switzerland. Kudlow has previously voiced strong opinions on the Federal Reserve.

While US President Donald Trump praised the negative rates assigned to bonds in other countries during a speech Tuesday at the World Economic Forum in Davos, Kudlow, offered a different view. Kudlow says that sub-zero yields and aggressive central bank practices are “ineffectual,” arguing that they are no substitute for pro-growth fiscal policy.

“Negative interest rates struck me as ineffectual,” Kudlow said during an interview with CNBC. “All this negative rates and printing money doesn’t really work, does it?”

“There’s nothing wrong with a balance sheet rising,” he said. “But where are the tax cuts? Where are the incentives for people to work the extra hour take the extra incentive and take the extra risk?”

Additional comments

Exports to China will be a huge growth factor for the US.
Its not fair to say that expectations are lower for phase-2.
Market opening is the key to Europe trade talks.
Tax cuts will not be in the budget proposal.

FX implications

There is a keen focus on the Fed this year. The dots indicate the Fed's neutral bias and the US dollar is consolidated in the main, although the recent COT report shows a bias to the downside for the DXY. US 10-year yields are extending the December downward trajectory, almost at the lowest pint since the trend began, 1.763%.

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.