Now that we’ve got the first rate hike on the books - the first rate hike in a little over 6 years, almost 2 years to the day after slashing rates back down to 0-0.25% from the 1.50-1.75% level at the beginning of March, 2020 - how high do you think it will raise rates before cutting rates?
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I think they’ll raise them slower than the market thinks they need to and then by the time they get to 1.5-2% they find a reason to stop/lower them again. This is a Fed that is more focused on one part of the mandate than the other.
I voted 2.0%-2.5% for the same reason as Normal Dan, that if interest rates have been this low this long, the fed won’t hesitate to drag them back down in short order to please the public next time something spooks the markets or economy.
I have the stopping point at 1.25% right now. We couldn’t get to 3% last time, and that was before printing even more moneybuying every conceivable, allowable asset in mass quantities for 2 yearsinjecting liquidity to prevent an alleged freezing of the financial system that has added trillions of dollars to the national debt acting to save the economy from ruin yet again.
The 2 and 5-year treasuries were inverted on the 10 near the end of March. The 5 is still inverted on the 10, and this morning it was inverted on the 30 after previous inversions. The Fed isn’t going to raise by more than a quarter point each meeting (the last half-point raise was 2000), so it’ll be late July before it’s finally at 1.00-1.25% and that’s if it goes up at each meeting. I think before September, Powell is panicking about further advances and is pressing everyone to slash rates.