Elizabeth Warren’s $1.25 trillion education plan aims to end the cycle of student debt—here’s how

I’m calling for universal free college and the cancellation of student loan debt for more than 95% of Americans. In 2015, President Barack Obama proposed a national policy that would make two years of community college free for all eligible students. Providing two years of community college at no cost for every responsible student is one of the best ways to do that.” Today, at least 17 states offer tuition-free community college for residents. Warren’s proposal also emphasizes the benefits — bey


I’m calling for universal free college and the cancellation of student loan debt for more than 95% of Americans. In 2015, President Barack Obama proposed a national policy that would make two years of community college free for all eligible students. Providing two years of community college at no cost for every responsible student is one of the best ways to do that.” Today, at least 17 states offer tuition-free community college for residents. Warren’s proposal also emphasizes the benefits — bey
Elizabeth Warren’s $1.25 trillion education plan aims to end the cycle of student debt—here’s how Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-04-23  Authors: abigail hess, reuters karen pulfer focht, -elizabeth warren
Keywords: news, cnbc, companies, trillion, student, aims, warrens, elizabeth, cycle, community, debtheres, free, college, debt, plan, cost, end, policy, students, obama, public, education


Elizabeth Warren's $1.25 trillion education plan aims to end the cycle of student debt—here's how

I’m calling for universal free college and the cancellation of student loan debt for more than 95% of Americans. This is the kind of big, structural change we need to make sure our kids have opportunity in this country. pic.twitter.com/KERw3APDMo

Free community college has become an increasingly popular policy among progressive politicians. In 2015, President Barack Obama proposed a national policy that would make two years of community college free for all eligible students.

“No hardworking student should be stuck in the red,” said Obama during his final State of the Union address in 2017. “We’ve actually got to cut the cost of college. Providing two years of community college at no cost for every responsible student is one of the best ways to do that.”

Today, at least 17 states offer tuition-free community college for residents.

Warren’s proposal also emphasizes the benefits — beyond reducing future student debt — that free public university would have on future and current college students.

“We expect everyone but the wealthy to take on mountains of debt if they want to get a post-secondary education. This is closing off opportunities for generations of Americans and widening this country’s racial wealth gap,” Warren wrote. “The cost of college deters people from attending college.”

She also argues that eliminating tuition and fees at public institutions would help increase graduation rates, especially among low-income students. According to the National Center for Education Statistics, just 40 percent of first-time full-time students earn a bachelor’s degree in four years, and only 59 percent earn their bachelor’s in six years.

With more than half of students struggling to graduate in four years, most students are forced to take — and pay for — extra years of college.


Company: cnbc, Activity: cnbc, Date: 2019-04-23  Authors: abigail hess, reuters karen pulfer focht, -elizabeth warren
Keywords: news, cnbc, companies, trillion, student, aims, warrens, elizabeth, cycle, community, debtheres, free, college, debt, plan, cost, end, policy, students, obama, public, education


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Bank of Japan chief: Trade is the biggest risk to the global economy

Increasing trade protectionism around the globe is the biggest threat to global economic growth, Bank of Japan Governor Haruhiko Kuroda says. “There [is] some sort of protectionism” around global trade, Kuroda told CNBC’s Sara Eisen in an interview that aired Monday. “That is I think most serious risk involved in the global economy.” Investors have been fretting over the possibility of a protracted trade war as it could hinder future corporate profits. “By the way, [the] IMF world economic outlo


Increasing trade protectionism around the globe is the biggest threat to global economic growth, Bank of Japan Governor Haruhiko Kuroda says. “There [is] some sort of protectionism” around global trade, Kuroda told CNBC’s Sara Eisen in an interview that aired Monday. “That is I think most serious risk involved in the global economy.” Investors have been fretting over the possibility of a protracted trade war as it could hinder future corporate profits. “By the way, [the] IMF world economic outlo
Bank of Japan chief: Trade is the biggest risk to the global economy Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-04-15  Authors: fred imbert, jiji press, afp, getty images
Keywords: news, cnbc, companies, uschina, protectionism, japan, sides, 2019, war, chief, risk, policy, bank, trade, economic, biggest, global, kuroda, economy


Bank of Japan chief: Trade is the biggest risk to the global economy

Increasing trade protectionism around the globe is the biggest threat to global economic growth, Bank of Japan Governor Haruhiko Kuroda says.

“There [is] some sort of protectionism” around global trade, Kuroda told CNBC’s Sara Eisen in an interview that aired Monday. “That is I think most serious risk involved in the global economy.”

Kuroda’s comments come as China and the U.S. try to strike a trade deal that would end an ongoing tariff war. The two sides appear to be closing in on a deal.

The Chinese made unprecedented proposals on forced technology transfers, a sticking point in the negotiations, Reuters reported earlier. Treasury Secretary Steven Mnuchin also said on Sunday the U.S. is open to facing penalties if it doesn’t comply with an agreed-upon trade deal. However, Mnuchin also said Monday the two sides still have lots of work ahead of them.

Investors have been fretting over the possibility of a protracted trade war as it could hinder future corporate profits. The International Monetary Fund also cut its economic growth forecast for 2019 to 3.3% from 3.5%, with trade among the risks cited.

“By the way, [the] IMF world economic outlook main scenario does assume the U.S.-China trade conflict will not worsen,” Kuroda said. If it worsens, it could lead to a different outlook for the global economy.

Still, Kuroda said the Chinese economy is “likely to recover in the second half” of 2019, highlighting the “huge fiscal stimulus measures the government has already decided.”

Global equities have been on a tear lately, with the iShares MSCI ACWI ETF surging more than 15% in 2019. On top of getting a boost from the perceived progress in U.S.-China trade talks, stocks have benefited from a pivot away from tighter monetary policy from the major central banks.

But Kuroda said there may be more room for central-bank easing, although he added that looser policy is note needed right now.

Subscribe to CNBC on YouTube.


Company: cnbc, Activity: cnbc, Date: 2019-04-15  Authors: fred imbert, jiji press, afp, getty images
Keywords: news, cnbc, companies, uschina, protectionism, japan, sides, 2019, war, chief, risk, policy, bank, trade, economic, biggest, global, kuroda, economy


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Turkish central bank needs to be ‘fully independent,’ IMF’s Europe director says

Economic and political developments in Turkey have had investors worried for more than a year now. One of the country’s most immediate needs if it wants to get its house in order is to ensure total independence of its central bank, according to the man who led the bailouts of Greece, Portugal, Iceland and Ukraine during the Great Recession. “So we welcome the increase we’ve seen in interest rates in the last six to seven months, but it’s important that the Turkish central bank be allowed to be f


Economic and political developments in Turkey have had investors worried for more than a year now. One of the country’s most immediate needs if it wants to get its house in order is to ensure total independence of its central bank, according to the man who led the bailouts of Greece, Portugal, Iceland and Ukraine during the Great Recession. “So we welcome the increase we’ve seen in interest rates in the last six to seven months, but it’s important that the Turkish central bank be allowed to be f
Turkish central bank needs to be ‘fully independent,’ IMF’s Europe director says Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-04-14  Authors: natasha turak, chris mcgrath, getty images
Keywords: news, cnbc, companies, fully, director, central, bank, europe, number, turkish, needs, independence, challenges, monetary, imfs, independent, policy


Turkish central bank needs to be 'fully independent,' IMF's Europe director says

Economic and political developments in Turkey have had investors worried for more than a year now.

One of the country’s most immediate needs if it wants to get its house in order is to ensure total independence of its central bank, according to the man who led the bailouts of Greece, Portugal, Iceland and Ukraine during the Great Recession.

“Turkey faces a number of challenges, and one of them is that the central bank needs to be fully independent so it can continuously assess and tighten policies as circumstances change in a forward-looking manner,” Poul Thomsen, director of the International Monetary Fund’s Europe department, told CNBC’s Joumanna Bercetche during the IMF Spring Meetings in Washington, D.C. over the weekend.

“So we welcome the increase we’ve seen in interest rates in the last six to seven months, but it’s important that the Turkish central bank be allowed to be fully independent in its assessment of monetary policy in addition to a number of other challenges on fiscal policy, and more transparency.”

Turkey’s economy is already in recession, rocked last year after fears over government interference into central bank independence, over-leveraged banks, a large current account deficit and a diplomatic spat with the U.S. triggered investor and capital flight. The lira lost 36 percent of its value against the dollar by the end of 2018.


Company: cnbc, Activity: cnbc, Date: 2019-04-14  Authors: natasha turak, chris mcgrath, getty images
Keywords: news, cnbc, companies, fully, director, central, bank, europe, number, turkish, needs, independence, challenges, monetary, imfs, independent, policy


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Singapore central bank stands pat on monetary policy as growth slows

17 out of 20 economists in a Reuters poll predicted that the central bank would keep monetary policy unchanged. Across Asia, a slowing world economy and abrupt end to Federal Reserve policy tightening have seen markets betting on outright rate cuts or easier policy stance for a growing list of central banks. “GDP growth in the Singapore economy has eased, bringing the level of output closer to its underlying potential. The central bank also on Friday revised down its 2019 core inflation forecast


17 out of 20 economists in a Reuters poll predicted that the central bank would keep monetary policy unchanged. Across Asia, a slowing world economy and abrupt end to Federal Reserve policy tightening have seen markets betting on outright rate cuts or easier policy stance for a growing list of central banks. “GDP growth in the Singapore economy has eased, bringing the level of output closer to its underlying potential. The central bank also on Friday revised down its 2019 core inflation forecast
Singapore central bank stands pat on monetary policy as growth slows Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-04-12
Keywords: news, cnbc, companies, bank, quarter, monetary, pat, stands, global, policy, central, tightening, growth, singapore, economy, slows


Singapore central bank stands pat on monetary policy as growth slows

Singapore’s central bank on Friday kept its monetary settings unchanged after two consecutive rounds of tightening, underscoring policymakers’ concerns about a cooling economy and rising risks to the outlook from slackening global demand.

The Monetary Authority of Singapore (MAS), which manages policy through exchange rate settings rather than interest rates, said it would maintain the slope of the Singapore dollar’s policy band while keeping the width and level at which the band is centered unchanged.

17 out of 20 economists in a Reuters poll predicted that the central bank would keep monetary policy unchanged.

Across Asia, a slowing world economy and abrupt end to Federal Reserve policy tightening have seen markets betting on outright rate cuts or easier policy stance for a growing list of central banks.

“GDP growth in the Singapore economy has eased, bringing the level of output closer to its underlying potential. Despite some pickup in labor costs, inflationary pressures are mild and should remain contained,” MAS said in its semi-annual statement.

MAS increased the slope of the policy band twice last year in efforts to control rising price pressures and strengthen its currency in its first such tightening moves in six years.

The central bank also on Friday revised down its 2019 core inflation forecast to 1 to 2 percent, from 1.5 to 2.5 percent previously.

Preliminary data for first-quarter gross domestic product (GDP) confirmed the city-state was experiencing its weakest growth in 2-1/2-years on a year-on-year basis.

From the year ago, GDP grew 1.3 percent in the first quarter, below the 1.5 percent expansion forecast in a Reuters poll.

GDP grew 2.0 percent in the January-March period from the previous three months on an annualized and seasonally adjusted basis, well above an expected 1.2 percent expansion.

Manufacturing, once a key pillar of growth for the city-state, showed a shock 12 percent fall in the first quarter from the quarter ago.

“We expected manufacturing to be down but the print is more severe than we thought,” Selena Ling, OCBC’s head of treasury research said.

The Singapore dollar was broadly unchanged after the decision.

Growth in the affluent city state has been dented over the past year by a Sino-U.S. trade dispute and slowing global demand.

“The uncertainty for the Singapore economy still remains the same, a two-pronged risk – U.S.-Sino trade relations and the maturing of the global electronics cycle,” said Barnabas Gan, Singapore economist at United Overseas Bank.


Company: cnbc, Activity: cnbc, Date: 2019-04-12
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UBS chairman: Europe is running out of economic policy options to boost growth

Both emerging markets and the U.S. appear poised to recover from last year’s economic stumbles, but problems persist for Europe, according to the head of global financial giant UBS. “We’re a bit skeptical about the ability of Europe to use stimulus to come out of this,” he said. In many European countries, including Italy and France, there’s very little room for governments to use fiscal policy to stimulate the economy, Weber said. Only Germany has room for additional fiscal measures, but Berlin


Both emerging markets and the U.S. appear poised to recover from last year’s economic stumbles, but problems persist for Europe, according to the head of global financial giant UBS. “We’re a bit skeptical about the ability of Europe to use stimulus to come out of this,” he said. In many European countries, including Italy and France, there’s very little room for governments to use fiscal policy to stimulate the economy, Weber said. Only Germany has room for additional fiscal measures, but Berlin
UBS chairman: Europe is running out of economic policy options to boost growth Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-04-12  Authors: saheli roy choudhury, angel navarrete, bloomberg, getty images
Keywords: news, cnbc, companies, economic, options, growth, weber, policy, europe, room, economy, running, monetary, lower, main, chairman, boost, fiscal, ubs


UBS chairman: Europe is running out of economic policy options to boost growth

Both emerging markets and the U.S. appear poised to recover from last year’s economic stumbles, but problems persist for Europe, according to the head of global financial giant UBS.

The continent is predicted to only achieve a slow rebound, Axel Weber, chairman of the Swiss investment bank, told CNBC’s Joumanna Bercetche in Washington D.C. on Thursday.

“We’re a bit skeptical about the ability of Europe to use stimulus to come out of this,” he said. “I think there is some downside risk in Europe and you have to acknowledge that. So, whilst I do have the main outlook to be a sort of L-shaped recovery, stabilization at a lower level, growth below potential, I don’t have the main scenario of a recession.”

The International Monetary Fund recently downgraded growth in the euro zone. It now expects the bloc to grow at 1.3 percent in 2019 — lower than its forecast had been six months ago.

In many European countries, including Italy and France, there’s very little room for governments to use fiscal policy to stimulate the economy, Weber said. That’s because their fiscal deficits are near the upper limit of the 3 percent of GDP that the European Central Bank allows. Only Germany has room for additional fiscal measures, but Berlin will only use it to boost the domestic economy, the UBS chief said.

On the monetary policy front, the ECB has pumped trillions of euros into the economy over the past few years to boost inflation and promote growth. Earlier this week, the ECB held interest rates steady.

“What you have to ask yourself is: After years of quantitative easing, is adding more of the same really going to have the same impact on the economy that it did have when they started this? My answer to that is, probably not,” Weber said.


Company: cnbc, Activity: cnbc, Date: 2019-04-12  Authors: saheli roy choudhury, angel navarrete, bloomberg, getty images
Keywords: news, cnbc, companies, economic, options, growth, weber, policy, europe, room, economy, running, monetary, lower, main, chairman, boost, fiscal, ubs


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Fed’s Clarida: US slowing, but expansion will ‘almost certainly’ break record

The U.S. is economy likely slowing from its strong rate of growth in 2018, with “important international risks” clouding the outlook, Federal Reserve vice chairman Richard Clarida said on Thursday. This summer, 10 years after the U.S. emerged from a punishing recession, “the current economic expansion almost certainly will become the longest on record,” said Clarida, vouching for the economy’s continued ability to grow. “That said, the incoming data have revealed signs that U.S. economic growth


The U.S. is economy likely slowing from its strong rate of growth in 2018, with “important international risks” clouding the outlook, Federal Reserve vice chairman Richard Clarida said on Thursday. This summer, 10 years after the U.S. emerged from a punishing recession, “the current economic expansion almost certainly will become the longest on record,” said Clarida, vouching for the economy’s continued ability to grow. “That said, the incoming data have revealed signs that U.S. economic growth
Fed’s Clarida: US slowing, but expansion will ‘almost certainly’ break record Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-04-11  Authors: andrew harrer, bloomberg, getty images
Keywords: news, cnbc, companies, policy, break, economic, growth, clarida, risks, outlook, slowing, international, record, certainly, important, expansion, feds, rate


Fed's Clarida: US slowing, but expansion will 'almost certainly' break record

The U.S. is economy likely slowing from its strong rate of growth in 2018, with “important international risks” clouding the outlook, Federal Reserve vice chairman Richard Clarida said on Thursday.

This summer, 10 years after the U.S. emerged from a punishing recession, “the current economic expansion almost certainly will become the longest on record,” said Clarida, vouching for the economy’s continued ability to grow.

“That said, the incoming data have revealed signs that U.S. economic growth is slowing somewhat from 2018s robust pace,” Clarida said in remarks prepared for delivery at the Institute of International Finance policy summit.

“Prospects for foreign economic growth have been marked down, and important international risks, such as Brexit, remain,” Clarida said, referring to Britain’s presumed departure at some point from the European Union.

Coupled with “muted” inflation, Clarida said that outlook justified the Fed’s current policy stance, with rates roughly at a level that neither encourages nor discourages investment and spending, and a “patient” approach to any further rate moves.

The Fed has put further rate moves on hold as it assesses the degree to which economic growth is slowing, and how major overseas economies fare in coming months.

Tune in: Fed’s Clarida will be on CNBC at 3 p.m. ET on Thursday.


Company: cnbc, Activity: cnbc, Date: 2019-04-11  Authors: andrew harrer, bloomberg, getty images
Keywords: news, cnbc, companies, policy, break, economic, growth, clarida, risks, outlook, slowing, international, record, certainly, important, expansion, feds, rate


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A good first quarter for stocks almost always leads to a solid year

The first quarter’s record rally that gave stocks their best start to a year since 1998 could turn out also to be a good omen. There’s of course more reasons to buy, according to BMO chief investment strategist Brian Belski. “Slowing global growth is certainly a concern, but the effect on these companies may not be as terrible as headlines suggest.” Lastly, for investors still pondering what the Federal Reserve’s policy U-turn means for the stock market, Belski said a pause on interest rate hike


The first quarter’s record rally that gave stocks their best start to a year since 1998 could turn out also to be a good omen. There’s of course more reasons to buy, according to BMO chief investment strategist Brian Belski. “Slowing global growth is certainly a concern, but the effect on these companies may not be as terrible as headlines suggest.” Lastly, for investors still pondering what the Federal Reserve’s policy U-turn means for the stock market, Belski said a pause on interest rate hike
A good first quarter for stocks almost always leads to a solid year Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-04-11  Authors: yun li, carlo allegri
Keywords: news, cnbc, companies, strategist, sp, good, belski, rate, past, global, policy, solid, stocks, market, leads, performance, quarter


A good first quarter for stocks almost always leads to a solid year

History seems to be on the bull’s side.

The first quarter’s record rally that gave stocks their best start to a year since 1998 could turn out also to be a good omen. According to BMO, every time the S&P 500 scored a gain of 10% or more in the first quarter of a year since 1935, the market managed to climb up 6% more on average for the rest of the year with positive performance during 11 of the 12 times.

Now, with a 13% surge locked in in the first three months of 2019, the future looks not bad if the past is any guide.

There’s of course more reasons to buy, according to BMO chief investment strategist Brian Belski. For one, the epic rally has actually showed “healthy market breadth,” meaning the participation has been broad-based, as opposed to be driven only by mega-cap tech names.

What’s more, the fears of a global slowdown might have been overblown as multinationals have proved to be outperformers this year, the strategist said.

“Slowing global growth has been one of the biggest concerns over the past several months … Interestingly, however, the 25 S&P 500 companies with the largest percentage of foreign sales have seen a sharp bounce in relative performance this year,” Belski said. “Slowing global growth is certainly a concern, but the effect on these companies may not be as terrible as headlines suggest.”

Lastly, for investors still pondering what the Federal Reserve’s policy U-turn means for the stock market, Belski said a pause on interest rate hikes has been historically good for the market. The Fed at its last policy meeting indicated no hikes are coming this year.

BMO looked at the S&P 500’s past performance since 1990 when the central bank changed course with its monetary policy, and found that the market gained nearly 10% on average from the date of the final rate hike to the date of a rate cut.

“We would recommend that investors continue to add exposure to U.S. stocks, especially during any periods of potential weakness — something that is highly likely given the current environment,” Belski said.


Company: cnbc, Activity: cnbc, Date: 2019-04-11  Authors: yun li, carlo allegri
Keywords: news, cnbc, companies, strategist, sp, good, belski, rate, past, global, policy, solid, stocks, market, leads, performance, quarter


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ECB set to hold steady amid heightened economic risks

“We have pushed back our first rate hike to October 2020,” Dirk Schumacher, ECB watcher Natixis in Frankfurt said in a note. The TLTROs are loans that the ECB provides at cheap rates to banks in the euro area. As a result, lenders are able to provide better credit conditions to customers, which in turn stimulates the real economy. TLTRO III is the third injection of stimulus of this kind from the ECB, announced in its policy meeting in March. If commercial banks lend this money onto the real eco


“We have pushed back our first rate hike to October 2020,” Dirk Schumacher, ECB watcher Natixis in Frankfurt said in a note. The TLTROs are loans that the ECB provides at cheap rates to banks in the euro area. As a result, lenders are able to provide better credit conditions to customers, which in turn stimulates the real economy. TLTRO III is the third injection of stimulus of this kind from the ECB, announced in its policy meeting in March. If commercial banks lend this money onto the real eco
ECB set to hold steady amid heightened economic risks Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-04-10  Authors: annette weisbach, bloomberg, getty images
Keywords: news, cnbc, companies, note, set, risks, banks, rate, announced, steady, economic, economy, rates, real, heightened, strategy, amid, policy, hold, ecb


ECB set to hold steady amid heightened economic risks

The European Central Bank is in an uncomfortable situation. It only announced its exit from the crisis-era multi-trillion bond buying program at the end of last year. However, only four months later there is more and more evidence that the economy is only having a temporary weakness as data across the board comes in lower than expected.

“The euro zone purchasing managers’ index (PMI) indicated a sluggish end to the first quarter with growth ebbing to one of the most lethargic rates seen since 2014,” Chris Williamson, chief business economist at IHS Markit wrote in a global economy report Tuesday. “The slowdown was led by a deepening downturn in manufacturing, where output fell at the sharpest rate for almost 6 years.”

That’s a problem for the ECB, as slower growth and demand will not help to bring inflation back toward their target of 2%. A rate hike is not expected for this year and there is even a growing debate to lessen the burden on banks from the negative deposit rate.

“We have pushed back our first rate hike to October 2020,” Dirk Schumacher, ECB watcher Natixis in Frankfurt said in a note. “We expect the ECB to introduce a tiering system for banks’ excess liquidity, reducing the pressure to lift rates out of negative territory.”

A so called two-tiered approach would mean that banks are exempted in part from paying the ECB’s 0.40% annual charge on their excess reserves. That would boost the banks’ profits at a time many lenders struggle with low profitability. Some members of the ECB’s Governing Council are said to be in favor of such a move.

“Tiering won’t be a silver bullet for banks or the economy but is likely to form part of a credit easing strategy alongside adjusted forward guidance, strong use of (targeted long-term refinancing operation) TLTRO – III’s “built in incentives”, and possibly some new tools,” Marc Wall, chief economist at Deutsche Bank said in a note last week. “The next most likely occasion for policy announcements is June. The details will be conditioned on the new ECB macro forecasts.”

The TLTROs are loans that the ECB provides at cheap rates to banks in the euro area. As a result, lenders are able to provide better credit conditions to customers, which in turn stimulates the real economy.

TLTRO III is the third injection of stimulus of this kind from the ECB, announced in its policy meeting in March. If commercial banks lend this money onto the real economy, they then receive cash rather than having to pay interest on the loans.

Last June Draghi announced its big exit strategy. It would be ironic if only a year after, he would have to announce new easing measures.


Company: cnbc, Activity: cnbc, Date: 2019-04-10  Authors: annette weisbach, bloomberg, getty images
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Goldman Sachs says chance of a recession is now just 10%

Goldman Sachs economists say Federal Reserve policy has reduced the risk of a recession over the next year to just 10% from a previous 20% at the end of the fourth quarter. But the Fed’s success in fighting off a recession may actually make it reconsider its policy of holding off interest rate hikes, as the central bank itself has noted, the economists wrote. The central bank, after that meeting, released revised economic and interest rate forecasts that showed expectations for a weaker economy


Goldman Sachs economists say Federal Reserve policy has reduced the risk of a recession over the next year to just 10% from a previous 20% at the end of the fourth quarter. But the Fed’s success in fighting off a recession may actually make it reconsider its policy of holding off interest rate hikes, as the central bank itself has noted, the economists wrote. The central bank, after that meeting, released revised economic and interest rate forecasts that showed expectations for a weaker economy
Goldman Sachs says chance of a recession is now just 10% Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-04-10  Authors: patti domm, leah millis
Keywords: news, cnbc, companies, sachs, yield, chance, recession, rate, tightening, financial, policy, economists, growth, conditions, interest, goldman


Goldman Sachs says chance of a recession is now just 10%

Goldman Sachs economists say Federal Reserve policy has reduced the risk of a recession over the next year to just 10% from a previous 20% at the end of the fourth quarter.

The economists concluded that the improvement in financial conditions since the beginning of the year is in large part due to the abrupt policy shift by the Fed, after it raised interest rates by a quarter point in December.

But the Fed’s success in fighting off a recession may actually make it reconsider its policy of holding off interest rate hikes, as the central bank itself has noted, the economists wrote.

“The Fed’s dovish shift was likely designed to decrease downside risks, and our findings suggest that this has largely worked as planned. As the lingering effects of the Q4 tightening gradually fade away, the Fed may eventually be willing to revisit the need for patience, as indicated in the January minutes,” they wrote.

The Fed was expected to release the minutes Wednesday of the Federal Open Market Committee’s March meeting, when it held rates steady. The central bank, after that meeting, released revised economic and interest rate forecasts that showed expectations for a weaker economy and no rate increases this year, reinforcing the “patient” stance officials had been discussing.

“Financial conditions have eased significantly in 2019, with the FCI [financial conditions index] now reversing roughly 80% of the tightening in 2018Q4,” the economists wrote, adding growth has also picked up. Financial conditions include such things as the stock market’s performance and interest rate levels.

Economists have been ratcheting up expectations for first-quarter growth and now many of them see it tracking closer to 2% than 1%, as it had previously. The yield curve is no longer inverted between the 10-year note yield and the 3-month bill yield, as it had been several weeks ago. A yield curve inversion is seen as a reliable recession signal.

Treasury yields have also risen, from the lowest levels in more than a year. On Wednesday, the 10-year yield was at 2.47% in late morning, after touching 2.51% earlier in the day.

The economists said the easing of financial conditions was by far the biggest influence on the reduction of downside risks.

“Our analysis also suggests that downside risk will likely be contained in the near-term, barring another large tightening in the FCI. In addition to the reversal of much of the Q4 FCI tightening, US growth momentum has improved and global growth appears to be stabilizing,” they wrote.

Correction: On Wednesday the 10-year yield was at 2.47% in late morning, after touching 2.51% earlier in the day. An earlier version misstated the day.


Company: cnbc, Activity: cnbc, Date: 2019-04-10  Authors: patti domm, leah millis
Keywords: news, cnbc, companies, sachs, yield, chance, recession, rate, tightening, financial, policy, economists, growth, conditions, interest, goldman


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