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Rather than affecting short-term interest rates, the Fed should focus on long-term interest rates. For example, the Bank of Japan adjusted its target towards the yield curve this month, with the goal of "locking" the 10-year Japanese government bond yield at zero level. The Fed will pay close attention to the effect of the Bank of Japan's new policy and may copy it one day. Importantly, the Fed has not implemented similar policies. In 2019, the Fed locked in the price of long-term U.S. bonds. Under this policy, the Fed locked in the price of long-term bonds, but the scale of bond purchases was determined by market demand. In this case, the Fed's asset size may expand sharply, and this policy will undoubtedly support the rise of silver prices, because silver usually shines when real interest rates go lower.
< c=_c> Fifth, the Federal Reserve can introduce a negative interest rate policy. Assuming that negative interest rates can help the economy, some economists believe that this is equivalent to a tax on bank reserves, which will actually help the economy only slightly. In response, some radical economists have even called for the elimination of cash. However, R will bring down real interest rates, which will be good for silver. However, Yellen does not seem to be a fan of R. She did not indicate at the meeting that negative interest rates will be in the future policy toolbox.
To sum up, if the next recession occurs soon, the Fed will have little more policy options to respond. This is the reality that monetary policy in the United States and other developed countries is approaching its limits, and why more economists are calling for fiscal expansion (and helicopter money is actually a semi-fiscal policy). In this case, every new policy introduced may be interpreted by the market as a desperate move by policymakers. Investors' loss of confidence in central banks will be a strong driving force for the silver bull market. In fact, when the Fed implemented the policy, silver rose sharply, which confirmed this judgment.
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