Quote:
Originally Posted by waddy41
Why would rates come back down in 2025 .. ? what do you see in your crystal ball
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It's just a guess - I'm making some assumptions that gov't banks aren't as hardline on 2% inflation as they say they are b/c the consequences of getting there quickly outweigh the benefits of 2% inflation. At some point there's a compromise that 2% is a medium-long term objective rather than a 2023-2024 objective. Gov't banks don't answer to politicians but they also know the goal is to create conditions for a robust economy and, at some point, chasing 2% quickly is just too painful so they chase after it as a 2027-2030 goal which softens the interest rate hikes.
I think we're still in an era where cheap money is needed for a robust economy - maybe it won't be as cheap as it has been the last few years but I'm not sure we can reset fundamentals that quickly when the horses have left the barn. As things like mortgage renewals show up and billions (trillions?) of dollars end up being redirected towards mortgage payments there will be some give that shows up. Homeowners will have to eat some shit but if they eat too much then everyone else will end up eating some shit too.
Maybe a simpler translation is that we've created a bit of a Ponzi scheme and, as we all know, the gov't will bail out the Ponzi scheme if the scheme is big enough to bring the economy down.