(Bloomberg) –Markets are underestimating the odds of ultra-low interest rates making a comeback in the US as the Federal Reserve’s hawkish stance risks crashing the economy, according to HSBC Holdings Plc.
There’s a “quite high” probability that the US central bank will need to cut rates close to zero in the next three to five years, Steven Major, the head of fixed income research at the bank, said in an interview. Trends seen before the Covid-19 pandemic that kept inflation low — such as aging demographics, excessive debt and wealth inequality — still exist today, he said.
