Артур Hayes: “Cutting rates is a bad idea because inflation is still a problem in the US. A cut could crash the cryptocurrency markets.”

Cutting rates is a bad idea because inflation is still a problem in the US and the government is the biggest contributor to sustained price pressures. If you make borrowing cheaper, it increases inflation.

The second reason is that the interest rate differential between the U.S. and Japan narrows when you lower rates. This could lead to a sharp appreciation of the yen and trigger a curtailment of yen-carry trades.

The initial reaction would be negative and the central bank's response would be to cut rates even more to deal with the crisis. So I think cutting rates is a bad idea, but they will do it anyway, and so they will get to zero quickly.