That said, the central bank is tightening based on incorrect models and will eventually be forced to start easing again, the author of Currency Wars suggested in this latest blog post.
“Investors should expect near recessionary conditions, and continued declines in stock prices for the next 6 to 8 months,” warned Rickards.
Markets are pricing in at least two more hikes by the Fed this year — in March and in June – and although Rickards agrees, he said he expects the Fed to eventually ease again.
“The easing will take the form of forward guidance,” he said. “[T]he Fed cannot cut rates after June due to the election cycle. December 2016 is the earliest possible date for a rate cut,” he added.
Some analysts have gone as far as to say the Fed will eventually need to implement another round of money printing – QE4. However, Rickards said he doesn’t necessarily agree, at least not for now.
- Source, Forbes