Isn’t raising rates to fight inflation the equivalent of bleeding to treat illness in the 18th century? It only “works” when it creates a deep recession, as in the early 80s. So far we’re lucky jobs growth has continued despite the rate increases. But they played a role, if not were the main cause, of the recent bank failures.
Blowing up banks presumably reduces credit growth. That’s sort-of of how interest rate policy is supposed to work. (Ideally, it was supposed to move expectations, but whatever.) Whether there is a deep recession remains to be seen.
Isn’t raising rates to fight inflation the equivalent of bleeding to treat illness in the 18th century? It only “works” when it creates a deep recession, as in the early 80s. So far we’re lucky jobs growth has continued despite the rate increases. But they played a role, if not were the main cause, of the recent bank failures.
Blowing up banks presumably reduces credit growth. That’s sort-of of how interest rate policy is supposed to work. (Ideally, it was supposed to move expectations, but whatever.) Whether there is a deep recession remains to be seen.