Mary Pieterse-Bloem, Professor of Financial Markets at Erasmus School of Economics and Global Head Fixed income in the Global Investment Center of the Private Bank of ABN AMRO, participates in the investment panel discussion on BNR Nieuwsradio, 18 June 2019. During this panel discussion, Mary Pieterse-Bloem discusses, together with the other panel members Karel Merckx (Beleggers Belangen) and Reinder Wietsema (IBS Capital Management), the chances that the Federal Reserve will lower interest rates.
The market has estimated that there is a chance of roughly 23 percent that the Fed will announce on Wednesday 19 June that it will lower the interest rates in the US. We can be quite sre that the Fed will do so in the summer, but right now, it is still interesting to see what they are going to decide. They will either let investors down because the chance is only 23% or it will surprise them positively by already lowering the interest rates.
Interest rates have been very volatile lately, especially after the Fed changed its policy. At the end of last year, it still increased the interest rates, but now they are planning to lower the rates again. As a result, interest rates in Europe have decreased as well. For example, the 10-year German bond yield was -0.25 when the markets opened today. However, after a speech of Mario Draghi, President of the European Central Bank, in which he stated that if the European economy will continue to develop itself as it does now, the ECB will have to stimulate the economy again soon. After this speech, the 10-year German yield decreased to -0.30. This only shows how volatile interest rates are: they are sensitive for every word that comes out of the mouth of a central banker.
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Listen to the entire podcast (in Dutch) on BNR Nieuwsradio ,d.d. 18 June 2019
