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re: Powell: Fed can maintain higher rates for "as long as needed"
Posted on 4/17/24 at 9:20 am to GeauxOn
Posted on 4/17/24 at 9:20 am to GeauxOn
quote:
The scale i.e. interest rates needs to tip one way or the other, increase rates high enough to actually drives change in discretionary spending or reduce rates to lower the debt burden on manufacturers, reducing the price of goods (which likely wont happen).
I think this is a pretty interesting point. Could the Fed have landed in a no man’s land sweet spot where rates are high enough to contribute to inflation by raising borrowing costs, but not high enough to really suppress consumption.
1
Posted on 4/17/24 at 10:45 am to ned nederlander
quote:
Could the Fed have landed in a no man’s land sweet spot where rates are high enough to contribute to inflation by raising borrowing costs, but not high enough to really suppress consumption.
That's exactly what happened in the late 70s and what is referred to as "stagflation".
Enter Paul Volcker who proceeded to raise rates through the roof, causing a recession - much to the consternation of Ronald Reagan.
No president wants the fed to raise their lending rate on his watch, even if it's better overall for the economy.
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