Weekly Inflation Outlook: Fed Hikes To Slow, But Inflation Collapse Still Elusive

when the U.S. Central Bank will almost certainly raise the overnight rate by 75bps to a full 4%.

is still too high and Top ten foreign exchange dealers in the worldlowering rates because of weak growth and inflation that is at least heading in the right direction. This, of course, remains to be seen, but my point is that the market is pricing in a very optimistic path for rates and inflation, and most of the ways that can be wrong are bad for markets.

, I noted that the Fed’s tool for decelerating economic output is not the same as its tool for restraining inflation. They were once joined because the level of required reserves (which influences the money supply) also influenced interest rates. These are now sundered since banks are not reserve-constrained. So the real question is, why does the Fed want to slow economic output?

Source: Bloomberg, calculations by Enduring Investments

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