What do you think about the level of rate increase for tomorrow (FOMC)? Is it 0.25, 0.5 or .75?
I think it will be 0.25 for mainly two contradictory reasons: (1) Pro 0.25 increase: Donald Trump economic Plan will increase deficit by another 5-6 trillions which is against the interest rate increase; (2) Pro 0.5: the same plan will also increase inflation, which will make bonds (the vehicle by which the government borrows money) very weak if the level of increase is not compensating the inflation increase.
Any views or comments are welcome. Thank you!
I think it will be 0.25 for mainly two contradictory reasons: (1) Pro 0.25 increase: Donald Trump economic Plan will increase deficit by another 5-6 trillions which is against the interest rate increase; (2) Pro 0.5: the same plan will also increase inflation, which will make bonds (the vehicle by which the government borrows money) very weak if the level of increase is not compensating the inflation increase.
Any views or comments are welcome. Thank you!