“Federal Reserve Bank of New York President John Williams says that rate hikes may not have to begin with a big bang as some suggest” –Paul Ebeling
With Biden inflation at its hottest marks since Jimmy Carter, the Fed watchers see it cooling the economy by raising its benchmark short-term interest rate from Zeroish to near Zero, where it’s been throughout the VirusCasedemic. The Big News Question has been how big and how quickly it will move, because an overly aggressive approach will choke the economy and a a huge increase on the massive $30-T national debt interest payments
Shayne and I do not see any compelling argument to take a step up at all, and perhaps its real rate should be below Zero.
The Fed and ECB act on data, we expects inflation to fall from its current level due to a number of factors, including the Fed’s moves and hoped-for improvements in supply-chain bottlenecks. Last month, inflation hit 7.5% in January compared with a yr ago.
Mr. Williams’ comments were echoed by other Fed officials, who spoke at a policy conference in New York during the wk.
Wall Street has been fixated on every word from Fed officials recently, hoping to divine how quickly and by how much the Fed will move if at all.
The mix of aggressive and moderate comments have left traders’ expectations at 6s and 9s. Traders were pricing in only a 21% probability of a 1/2 pt move on Friday afternoon, down from 49% a week earlier.
We believe that digital assets is best place to store capital following the potential fallout of interest rate hikes. No mater what the Fed does, blockchain is a legit place to invest now.
Have a healthy, prosperous weekend, Keep the Faith!