Get the best daily market and macroeconomic commentary anywhere for less than $7 per month.
Already have an account? log in
Powell Says May Need Faster Hikes. Terminal Rate Likely Higher
The Fed is ready to re-accelerate the pace of rate hikes if necessary, Jerome Powell told US lawmakers on Tuesday, in remarks prepared for two days of testimony on Capitol Hill.
Powell conceded, up front, that January's economic data "partly reversed the softening trends that we had seen just a month ago."
Although he cited unseasonably warm weather in "much of the country," he was quick to note that between January's figures and revisions which suggested the Fed lost momentum in the fight to
Unfortunately I think the correct metaphor is going to Milton Friedman’s fool in the shower story.
I increasingly get the feeling the Fed is walking into a trap of its own making, by all means push terminal higher if that is what we need to tame inflation, but jumping back to 50 bps just screams of losing control and a confused narrative, the Fed is giving into panic fueled largely by coincident and lagging data. The scenario where we experience a very hard landing just as we start election season is a very scary proposition and it is looking more likely every day.
And there’s the debt ceiling circus to come.
H-Man, the war is over when the terminal rate is higher than the inflation rate. Not there yet.