Today's Fed-heads are old enough to remember the 1970s, when failure to get inflation under control produced a decade-long monetary crisis that was only resolved with interest rates approaching 20%. On the other hand, the yield curve - the difference between long-term and short-term interest rates - is trending towards zero and will, if it keeps falling, invert, meaning that short rates will exceed long.
Unemployment near a 20-year low screams at the U.S. Federal Reserve to raise interest rates or risk a too-hot economy.
New Fed staff research and Powell's own remarks seem to put more weight on the risks of super-tight labor markets, which could mean a shift up in the Fed's rate outlook and a tougher tone in its rhetoric.
Goldman Sachs economists contend the Fed's "Optimal" rate path is "Well above market pricing under a broad range of assumptions." They see four increases likely next year, while investors expect only one or two, a significant gap.
First, higher interest rates will, other things being equal, make the dollar stronger.
Send the economy back into recession with higher interest rates, and government tax revenues, corporate sales and profits, and personal incomes all fall at the same time interest costs are soaring because of those higher rates.
Which means rising interest rates will beget much, much lower rates before too long.
https://www.zerohedge.com/news/2018-09-26/feds-box-and-people-are-starting-notice
Unemployment near a 20-year low screams at the U.S. Federal Reserve to raise interest rates or risk a too-hot economy.
New Fed staff research and Powell's own remarks seem to put more weight on the risks of super-tight labor markets, which could mean a shift up in the Fed's rate outlook and a tougher tone in its rhetoric.
Goldman Sachs economists contend the Fed's "Optimal" rate path is "Well above market pricing under a broad range of assumptions." They see four increases likely next year, while investors expect only one or two, a significant gap.
First, higher interest rates will, other things being equal, make the dollar stronger.
Send the economy back into recession with higher interest rates, and government tax revenues, corporate sales and profits, and personal incomes all fall at the same time interest costs are soaring because of those higher rates.
Which means rising interest rates will beget much, much lower rates before too long.
https://www.zerohedge.com/news/2018-09-26/feds-box-and-people-are-starting-notice
No comments:
Post a Comment