18 Mar

Federal Reserve Isn’t the Only Patient Central Bank

WRITTEN BY Mark O'Hara FEATURED IN Macroeconomic Analysis and Financials

Federal Reserve

Globally, governments like to see lower interest rates because it boosts growth. President Trump, who criticized the Fed for keeping rates too low, changed his stance after the election. He has lashed out at Fed Chair Jerome Powel for raising rates.

Federal Reserve Isn’t the Only Patient Central Bank

However, Warren Buffett, Berkshire Hathaway’s (BRK-B) chairman, praised Powell. Read Warren Buffett Disagrees with President Trump to learn more.

Berkshire Hathaway

Berkshire Hathaway’s portfolio is overweight in the financial sector (XLF). The company holds stakes in Wells Fargo (WFC), Bank of America (BAC), Goldman Sachs (GS), American Express (AXP), JPMorgan Chase (JPM), and U.S. Bancorp (USB). Berkshire Hathaway also has a stake in Apple (AAPL). However, the company exited Oracle (ORCL) in the fourth quarter.

After raising rates four times this year, the Fed took a dovish stance and said that would be “patient” with future rate hikes. However, the Fed isn’t the only central bank that’s patient with rate hikes. Last week, the Bank of Japan kept its key interest rate unchanged.

Europe

At the beginning of March, the ECB (European Central Bank) said, “The Governing Council now expects the key ECB interest rates to remain at their present levels at least through the end of 2019.” The current language is more dovish than last year when the ECB said that the rates would be on hold “at least through the summer of 2019.”

While central banks in developed countries have taken a dovish stance amid softer growth, their counterparts in emerging countries have gone a step further and have been loosening their monetary policy.

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