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Until The Jobs Are Done
For the second time in as many policy meetings, the Fed will hike rates in the shadow of bank stress
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In a sane world taxes would be the other option Mr. H.
Fiscal policy aimed at deliberately cooling the economy isn’t a popular notion inside the Beltway. It’s only been tried (where “tried” means with the express purpose of cooling things down) one time in modern history that I’m aware of. I doubt we’ll ever see it tried again.
Reminds me of something I read somewhere about how politicians are keen on heeding Keynes’s advice on spending their way out of a recession, but unwilling to apply the other part of Keynes’s prescription of running a budget surplus (eg by raising taxes) in good times.
The permanent state of exception only runs in one direction!
The FOMC never listens to me, but I hope they don’t overtly signal a potential pause in June lest they unleash the financial conditions roller coaster again. Stick with data dependence and the dual mandate mantra — that’s all the market needs right now. It’s not the Fed that is confusing the markets, but the economy. The Fed can’t do much about that.