Predictably, many politicians and pundits are howling in protest, warning of the risks of overkill
The nominal FFR, now effectively at 3.1%, remains five percentage points below the three-month average of the headline CPI inflation rate of 8%.
It is all but impossible to accomplish that objective with a sharply negative real FFR of around -5%.
With the real FFR at -5%, the Fed is not even close to being neutral, let alone restrictive.
They and the financial markets are underestimating the ultimate monetary tightening that will be required to return inflation to a 2% target.
I suspect that the nominal FFR may well have to rise into the 5-6% zone to accomplish that task
A global recession next year is all but inevitable.
Stephen S. Roach Project Syndicate 27 September 2022
The worst bond rout in decades is drawing more investors to government debt, with JPMorgan Asset Management joining the growing camp of bulls.
it’s clearly cheap relative to recent history,” Vij said in a briefing.
Vij wagering on government bonds in the belief that the global economy will eventually buckle under the weight of aggressive rate hikes.
But with major central banks showing little inclination to ease the pace of tightening, they risk being saddled with outsized losses if the bets backfire.
Bloomberg 28 september 2022
The Federal Open Market Committee's (FOMC) overarching focus right now is to bring inflation back down to our 2 percent goal 26 August 2022
https://englundmacro.blogspot.com/2022/09/the-federal-open-market-committees-fomc.html
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