Fed Chairman Jerome Powell expressed the Fed’s Hawkish stance at the Fed’s annual meeting in Jackson Hole this year. After all this time and misleading the people by stating all the time that inflation is under control and transitory, the highest ranking central banker in the US comes out and says that the Fed will do all it must to contain inflation. He claims that higher, sustainable rate hikes would help bring inflation back to Fed’s target of 2%. So, does this mean, we see more and higher rate hikes, than anticipated and proclaimed by the Fed just weeks ago?
But the Fed seems to be the only group at the moment that is willing to fight inflation (or at least says so). No government in the world wants to counter inflation. China just presented a $165 billion new fiscal stimulus. US president Biden gifts student borrowers $10,000 and Congress pumps hundreds of billions into the green energy project. Oh, yes, there are also more support checks delivered by mail and probably a lot more to come, due to our energy crisis. Europe is doing the same on electricity. Difficult to get inflation under control when you hand out free helicopter money.
Powell took a hard line for the first time. He mentioned pain that will be experienced in the labour markets and he warned the financial markets of more rate increases to come. We saw a sell-off of 3-4% on Friday that continues this morning in Europe.
I just wonder when the rest of the “smart people” on Wall Street and the mainstream media are jumping on the bandwagon. Probably too late. But when you have read this blog, you are informed and ahead.
Sven Franssen