The danger is that even a very small step to raise interest rates would have a significant impact on interest payments due to the massive size of the debts. Having already reduced interest rates drastically to effectively zero since it was last revised, the Fed is now running out of intervention tools. It would have - if not due to fears over what negative interest rates could have on their US bonds. Even prior to Powell's policy statement, inflation was averaging below 2 percent. While a zero interest policy will benefit the haves more than the have-nots, protracted weakness of the US dollar may force the US economy to fall into a vicious cycle like that of Japan.

Source: The Standard August 30, 2020 19:07 UTC