Posted on 06/29/2022 4:58:25 AM PDT by Browns Ultra Fan
Cleveland Fed’s Mester is channeling The Carpenter’s song “We’ve only just begun … to raise rates.”
Financial markets are anticipating what Mester is saying: rapidly rising interest rates. But as you can see from the following chart, gasoline prices (orange line) are driving rising US prices. So it is doubtful that monetary tightening will slow price increases. But Mester and company can only control monetary stimulus.
Mortgage rates have soared as The Fed attempts to crush inflation. And mortgage purchase applications fell -21% WoW in the most recent Mortgage Bankers Association survey.
The Refinance Index increased 2 percent from the previous week and was 80 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 0.1 percent from one week earlier. The unadjusted Purchase Index decreased 21 percent compared with the previous week and was 24 percent lower than the same week one year ago.
It almost seems like Mester is following the Taylor Rule (not really). But using CPI YoY, the Taylor Rule is saying that The Fed Funds Target Rate should be … 22.10%. It is only 1.75% after years of excessive stimulus following the banking crisis of 2008/2009. And Yellen who seemingly never met a rate hike that she liked.
If we use core PCE as our measure of inflation, the Taylor Rule is still high at 13.25%, a whopping 11.50 spread over the current target rate.
Will The Fed drive up rates and risk a recession ala Paul Volcker? Are we sitting on top of the world or about to get fried?
Bear in mind that gasoline prices are up 104% under the Biden Administration and mortgage rates are up 105%.
(Excerpt) Read more at confoundedinterest.net ...
I don’t recall if it was your thread, but it alluded to 10 months of rate increases via the Fed…
Their attempt is akin to Tony Romo trying to score a touchdown on a muffed field goal snap.
As an Eagles fan (formerly), I appreciate the memory of Cowboy pain…
There’s a crew behind Obutholes crew.
The author makes some good points about how rising interest rates will hurt the economy. But what is he saying here? That interest rates should remain artificially low?
That raising interest rates will do nothing to stop the devaluation of the value of currency.
The Fed would be doing the same even if Trump had won. Raising rates is the most common tool used to combat inflation. How well it will work in this instance remains to be seen.
...and makes it more difficult to move. The Democrats have a problem with citizens fleeing Democrat holes for Republican states and this is one way to stem the flow of departures.
It looks like the mortgage rate has to increase at least another 140% to equal Carter 2,0. Let’s go Brandon!
Only IF you are buying and selling a home/condo.
Selling is only a matter of price. Most people that own a home could easily sell it for a huge profit. Even if they had to drop the price 20%. Home prices have doubled everywhere in the last 3-10 years around the country.
IF I was going to move right now, I would NOT buy a house based on the current market. I would rent for a year or two. If I sold the house I bought for $270K ten years ago, I could easily sell it for $550K or more.
and of course you're right.... But Dementia Joe cant even read a teleprompter when they tell him what to say! ....This country is screwed ....
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