Will another rate hike be a massive mistake by the Fed?

Quick Take

• As we hole for a 25bps complaint hike that takes the Fed funds complaint to 5.00-5.25%, this could beryllium a 3rd mistake from the Fed.

First Mistake

• The Fed hiked rates mode excessively precocious aft ostentation was inactive an issue; the Fed’s equilibrium expanse continued to summation portion ostentation was surging.
• Q2 2022: 8960B (peak)
• Q4 2021: $8464B +$496B

Inflation CPI YoY

• Q2 2022: 8.6%
• Q4 2021: 5.5%

Fed Balance Sheet: (Source: FRED)

Second Mistake

• Then the national reserve accrued the Fed funds complaint astatine the quickest complaint ever, yet crushing banks. We are present seeing the aftermath of these results.

Rate Hike: (Source: Federal Reserve)

Third Mistake

• This is much of an opinion, but owed to the supra mistakes, it would beryllium sensible to hold 1 much period to spot the interaction of said complaint hikes. However, ostentation is inactive implicit treble the feds people truthful a complaint hike tin beryllium deemed necessary.

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