|
How High Will We Go? — Going into the release of FOMC minutes during a tightening cycle is an interesting experience.
Some of you have never experienced a tightening cycle, so I’d encourage you to pay attention to the news from the various sources as well as read the guidance from the committee and Daddy JPow directly.
While the macro underpinnings of no two economic cycles are the same, there are some underlying similarities that might prep you for the next one.
There are a few big questions lingering right now:
- How high will rates go?
- Is the Fed serious enough about inflation to stamp it out?
- Will all of this tightness plunge the economy into recession?
Bill Ackman’s latest rant on Twitter signaled his opinion. He thinks that the Fed isn’t serious enough about inflation and that rates aren’t rising fast enough to tamper out its effects.
Others have called for a full 100 bps (not pronounced “beeps,” weirdos) at every meeting until inflation is near the Fed’s target.
The minutes released yesterday echoed the recent comments by Fed officials: a hawkish Fed is willing to squeeze and squeeze hard to squash inflation.
Monetary policymakers feel the need to continue down the path of 50 bps rate hikes, predicting such a move at several subsequent FOMC meetings.
These policy bigwigs also predict that they might need to raise rates beyond the expectations of the financial markets, broadly speaking.
This type of policy move might need to move beyond a neutral stance… something that could end up restricting growth.
Last month’s 50 bps rate hike was the largest in 22 years, but we’re also dealing with inflation that is higher than we have seen in the last 40 years.
Let’s just hope that an aggressive Fed doesn’t mean there’s a noose around our portfolios’ necks.
Good luck, Apes.
|
Dolore quas aut accusamus repellendus sit pariatur. Quas quis laudantium quo ut saepe ipsum odit. Est quia odio voluptate deserunt nulla perspiciatis pariatur dolores.
Vel ipsam enim enim voluptas at. Sed voluptas aut sed aut eos voluptas. Impedit qui illo sequi impedit ut esse neque. Incidunt adipisci rem voluptatem nihil temporibus beatae accusamus delectus.
Dolorem eveniet voluptates id sed debitis aut nihil repellat. Velit officiis debitis autem quia quae in architecto unde.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...