Can we all agree that the Federal Reserve has a plan to combat hyperinflation? They do. President Jerome Powell acknowledged this. Having softened his comments ahead of the previous price increases, allowing room to maneuver giving way to a market rebound, Powell left no worries about this rally. It is necessary to wreak havoc on the economy, put pressure on labor markets and raise wages to stop the creeping inflation. Whether you buy this logic or if you think – Like Elon Musk – That such movements can lead to contraction – it does not matter.
All that matters is what those who vote to raise prices think, and there is plenty of evidence that they won’t stop until the rate exceeds 4%. Wednesday’s rate hike of 75 basis points only moved us in that direction. This is the third modification of its kind from 75 basis points, and We’ve all been told it won’t be the last. While these price increases were historic, they prolong the economic pain associated with them. It’s time for the Fed to be pretty honest about where the economy is and where it’s headed.