Isn’t the common theory at this time that the Fed May actually push sub zero interest rates?
No, that’s really not the direction things are going. The next move is a rate increase, probably at the December meeting. There were abstract discussions in Jackson Hole about what the Fed might do if they were to be confronted with a fresh downturn, what tools are in the kit to deal with that, and consideration of negative rates was mentioned in that context, but not as a current policy discussion.
The Fed is not going to raise rates early to please Donald Trump or prove him wrong. There’s about a 25% chance now that they do go in September, but if so, it will be about the economy reaching full employment not about DT.
The Fed put out a calendar earlier this year that roughly outlined their plan for slowly raising interest rates. So far they have only increased rates 25bps and have otherwise suspended the program after the market went apeshit after the first hike.