Inflation or Deflation ahead?

ndt · 08-03-2023, 09:04 AM

Overcompensate for the mistake of beling slow initially when the whole market was advicing him otherwise, hard lending of economy for a while at any cost will still give him victory over inflation while not getting it under control will paint him looser on both accounts, legacy and celebrity level of reputation also at risk..

shri · 08-03-2023, 09:37 AM

Originally Posted by huja:

Powell seems determined to make 2% inflation rate the hard target at the expense of just about everything else. Is that a good idea?! It's like this guy lived through the Weimar Republic era.

Blame it on the Kiwis..

Of Kiwis and Currencies: How a 2% Inflation Target Became Global Economic Gospel https://nyti.ms/13J7cah

https://qz.com/2022696/where-did-the...rget-come-from

SirNotAppearing · 08-03-2023, 09:51 AM

"Mistakes" are 20/20 hindsight. And some of the Fed Board of Governors are rotated annually and not all of them vote. Powell was appointed by Trump for a 14 year term and Trump immediately began criticizing Powell for not lowering rates or lowering them fast enough (I just recall T kept harping on it). Every president wants low rates and an economy that's only going in one direction: up. Biden probably wants lower rates, but isn't dumb enough to say it out loud because he knows to stay in his lane.

huja · 08-03-2023, 11:08 AM

Originally Posted by shri:

Blame it on the Kiwis..

Of Kiwis and Currencies: How a 2% Inflation Target Became Global Economic Gospel https://nyti.ms/13J7cah

https://qz.com/2022696/where-did-the...rget-come-from

Good stuff, @shri. Thanks for sharing.

bdw · 09-03-2023, 02:05 PM

In the US, raising interest rates doesnt have an immediate impact for most mortgage borrowers because most US mortgages are fixed for the life of the mortgage (20 or 30 years).

In contrast, somewhere like Australia where most mortgages are on variable rates, interest rates have risen for 10 months in a row now and immediately passed on to mortgage borrowers, much more painful, more effective in tackling inflation.

https://www.news.com.au/world/north-...abd750561b59fc

Sith · 09-03-2023, 03:56 PM

Originally Posted by bdw:

In the US, raising interest rates doesnt have an immediate impact for most mortgage borrowers because most US mortgages are fixed for the life of the mortgage (20 or 30 years).

In contrast, somewhere like Australia where most mortgages are on variable rates, interest rates have risen for 10 months in a row now and immediately passed on to mortgage borrowers, much more painful, more effective in tackling inflation.

https://www.news.com.au/world/north-...abd750561b59fc

It actually does impact even the fixed rate loan countries as new mortgages will have a higher rate and thus people get a lower mortgage and house prices can drop because of that.

huja · 15-03-2023, 02:43 AM

The Fed is like a so-called building contractor with a toolbox filled with hammers of various sizes and nothing else.

The Federal Reserve was closely watching this inflation report. Several indicators have suggested that the economy retains more strength than expected even as officials try to slow growth and cool inflation. Until this week, many economists thought the size of the central bank’s upcoming March 22 rate move would hinge on Tuesday’s data point.

But now, the Fed’s path is complicated by bank blowups in recent days. Some economists have downgraded how big of a rate move they expect, while others are calling for a pause or even an outright rate decrease as central bankers try to restore stability to the banking system.

“It’s a strong report,” said Priya Misra, global head of rates strategy at T.D. Securities, adding that she thinks the inflation data will solidify a quarter-point rate increase by the Fed on March 22. “It’s really hard for the Fed to respond by not hiking — or cutting, that’s crazy talk.”

https://www.nytimes.com/live/2023/03...ederal-reserve