Bloomberg/John Authers/9-27-2022
“It seems as if it was just yesterday when critics of the Federal Reserve were attacking it for moving too late to rein in inflation. Now, with inflation at or close to four-decade highs, those critics look prescient — but the rhetoric is shifting to a tone of unease. Now, the fear is that the Fed might overtighten as it embarks on its fastest rate-hiking cycle since the early 1980s and effectively tip the US economy into a recession.”
USAGOLD note: Authers raises the prospect of inflation already abating at a time when the Fed believes it needs to induce a recession to tame it. The Fed, it seems, is forever fighting the last war. “The clear concern now,” writes Authers, “is that the Fed will follow last year’s dovish error with a hawkish one.” Fear not. We can get back to square one by following a hawkish error with another dovish one.
