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September 25, 2020

The Bond Buyer: Kevin Philip Quoted in "Will Fed need to consider negative rates without stimulus?"

"Will Fed need to consider negative rates without stimulus?" by Gary Siegel, The Bond Buyer.

The Fed meeting its dual mandate is “paramount,” according to Kevin Philip, managing director at Bel Air Investment Advisors. "The first and foremost thing one must remember is that the Fed will do whatever it needs to in order to support employment, prevent deflation, and encourage modest inflation.”

Despite the many statements by Fed officials against using negative rates, they will use negative rates, if needed, he said.

“While politically unfavorable and potentially challenging for a system as large and complex as the U.S., other central banks have now demonstrated the capability of negative interest rates to have some effect on a stressed economy, albeit the degree of which is still debated,” Philip continued. “Given the impasse in Congress for additional fiscal stimulus, we are probably one market dislocation away from the Fed rolling out the next batch of tools; and there isn’t much left but more quantitative easing, the expansion of types of assets the Fed purchases, and negative interest rates."

Read the full article here.