Quote:
Originally Posted by ASAP
75 BPS... this will be interesting
|
The Fed signaled that on Monday (note that several banks “predicted” it within one hour of each other), to avoid surprising the markets. This has been Fed practice for a while.
There are some signs that inflation is close to a peak, or may have peaked (numbers lag), and the Fed indicated likely positive growth for Q2 and 2H, in an attempt to allay recession fears. If the former is true, the rate hike plus QT risk pushing the economy into recession. If the latter is true, more rate increases will continue to be needed, along with QT, to try to tame inflation. IMO monetary policy will have limited impact since the source of this inflation is largely supply constraints (although the $2T fiscal stimulus last year didn’t help). Those constraints have more to do with global markets and policy decisions than either monetary or fiscal policy. So I’m leaning toward protracted stagflation.