Bank of America: The Biggest Risk to Global Stocks Is Exactly the Opposite of What Most People Think it Is
Senate Banking Committee Chairman Sen. Richard Shelby, R-Ala., left, and the committee's ranking member Sen. Sherrod Brown, D-Ohio, right, with Federal Reserve Board Chair Janet Yellen on Capitol Hill in Washington, on Feb. 24, 2015.
Photographer: Susan Walsh/AP PhotoNo one knows for sure when the Fed will make its first rate hike in nearly a decade, but Bank of America says everyone is ignoring an interesting risk: that the Fed doesn't hike and actually embarks on another round of QE. Here's an excerpt from a note sent out by the firm and lead analyst Savita Subramanian.
The firm doesn't expect that the Fed will take this course, but the team does believe it is enough of a possibility that it should not be ruled out. And while a return to QE may be very remote, it is true that Yellen wants to avoid the path of Sweden, which raised rates prematurely after the crisis and was forced to backtrack.