Surprise Rate Hikes Force Yet Another Market Rethink

Markets are on notice: Rate hikes can recommence after a pause. I'm not sure why there was any doubt in the first place. Unless the dictionary definition of "pause" has changed recently (which I suppose is possible given how wrong we all were about the definition of "transitory"), pause means a temporary stop. Granted, we now know that transitory means years, and transitory is a cousin of temporary, so I guess you could argue that a central bank which pauses rate hikes is a central bank that w

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4 thoughts on “Surprise Rate Hikes Force Yet Another Market Rethink

  1. Back to the future. Keep your eye on the economy not on the Fed. The Fed is a price taker for rates now, not a price maker anymore. Spend your time trying to figure out where the economy is headed. Figuring out this FOMC has become a shell game. They are going to be reactive to economic conditions, not pre-emptive.

  2. The 2000 to 2023 period was an exception to the prior 40 year period, where during this prior 40-year period the federal funds rate was typically higher than the annual inflation rate (specifically the year over year inflation rate). And over this prior 40 year period, when the federal funds rate wasn’t at least 200 bps higher than the annual inflation rate, this annual inflation rate was on an upward trend vs. a downward trend when the federal funds rate was sustainably more than 200 bps over the annual inflation rate.

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