Timing is Everything: The Fed raised the federal funds target rate by 75 basis points this past Wednesday and market reacted as expected with the S&P dropping on Thursday by nearly 4 %. Will the Fed push the economy into recession? ITR Economics Brian Beaulieu says, “that line of thinking may be giving the Fed credit for power they do not have” and that “most people get the timing of the relationship wrong”; he warns that we fail to understand the actual historical time lags between interest rate increases and recessions. Check out his recent blog post for a little optimism based on readily available data.
The Fed Goes Bigger: Regarding the Fed’s 75 bp jump, economist Dr. Brian Wesbury concludes that “The bottom line is that it’s good the Fed is now more aware of the enormity of the inflation problem it has created, although it is still too optimistic at how quickly it will get it back under control.” Check out his blog post “The Fed Goes Bigger.”
