President Trump is once again pressuring the US Federal Reserve to cut interest rates. The policy, aimed at promoting economic growth, may serve to further increase the appeal of Bitcoin.
Trump took to Twitter once again today to criticise the Fed’s reluctance to follow other nations in cutting rates into the negative territory. He reasons that the US is at a disadvantage compared with countries thanks to its relatively high interest rates.
Trump Still Wants Further Interest Rate Cuts
President Donald Trump today attacked the US Federal Reserve chair Jerome Powell and the institution itself. Trump believes that the central bank’s reluctance to drop interest rates as low as other nations is disadvantaging the country.
As usual, Jay Powell and the Federal Reserve are slow to act. Germany and others are pumping money into their economies. Other Central Banks are much more aggressive. The U.S. should have, for all of the right reasons, the lowest Rate. We don’t, putting us at a…..
— Donald J. Trump (@realDonaldTrump) March 2, 2020
The president said that the Federal Reserve should be following nations like Germany who are “pumping money into their economies”. Germany’s interest rate is currently -0.3 percent.
Negative interest rates, like those in Germany, Japan, Sweden, Denmark, and a few other nations, are a rather extreme economic policy. The idea behind negative rates is to promote growth by encouraging borrowing rather than saving.
Some European nations adopted the controversial policy following the 2008 financial crisis. Since then, more countries have experimented with negative rates and, as Trump has made clear both today and previously, the US wants to try and squeeze a little more out of its economy too.
A Boon For Bitcoin?
The Federal Reserve will next meet on March 17-18. According to a recent report in Bloomberg, Jerome Powell said on Friday that the central bank would “act as appropriate” in support of the economy.
With Trump continuing to champion extreme rate cuts, it seems likely that the meeting in a fortnight will result will see a drop. Whether such a cut will push rates into the negative territory or not remains to be seen.
Negative interest rates effectively tax those holding cash at a bank. This is supposed to encourage those with cash holdings to put them to use in the economy.
However, those averse to risk might respond to the such an attack on savings by investing their capital in a more sound form of a money and one free from the meddling of central bankers or governments. With its completely decentralised consensus model and finite supply, Bitcoin would surely represent a strong contender for such an investment asset.
BREAKING: Trump urges the FED to "be a leader" and push rates lower than other countries.
In other words, Trump urges the FED to push rates to 0 or even into negative territory.#Bitcoin can save us from this insanity!
— The Moon (@TheMoonCarl) March 2, 2020
Many Bitcoin industry analysts believe that the crypto asset can help protect individuals’ savings from negative interest rates. The Moon (@TheMoonCarl) describes the policy as “insanity” and touts BTC as a worthy antidote.
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