(I have broken Betteridge’s law of headlines — the answer to the question in the headline is “yes.”) I would guess that this week’s Fed hike will be followed by a “pause,” but that pause may be just for one meeting. Although my bias is to assume that the weakness is partly equity market shenanigans, the banking system is having trouble digesting rate hikes. The Fed can afford to wait a meeting to see what happens.
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.
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.