Posted on 08/15/2022 12:50:43 PM PDT by John W
NEW YORK (Reuters) - With the recent slowdown in inflation, the Federal Reserve is faced with a conundrum ahead of a plan next month to double the rate at which it is shrinking its massive $8.9 trillion balance sheet.
The move to accelerate quantitative tightening (QT), as it’s referred to, is meant to further drain pandemic-era stimulus from the financial system and increase borrowing rates for long-dated assets to weaken inflation.
But that is taking place as the U.S. central bank pushes ahead with interest rate hikes to tame stubbornly high inflation, which is currently running at more than three times the Fed’s 2% target.
The double tightening, however, makes it harder for the Fed to achieve a “soft landing” in which the economy slows but avoids a recession. With some investors believing the economy is already in a recession, speculation has grown that if something has to give, it could be the pace at which QT unfolds. The odds, however, remain long that the Fed would change its plan in the near term, some bond investors say.
“There is some latitude for the Fed to either eventually go on a slow trajectory on quantitative tightening or even end earlier than expected. But it is hard to know (as to how) the Fed balances things out,” said Yung-Yu Ma, chief investment strategist at BMO Wealth Management in Dallas.
“At what point does the Fed view that financial conditions have tightened enough? That’s nebulous ... and you don’t really know until after the fact if you have gone too far.”
(Excerpt) Read more at stocks.apple.com ...
Stopped reading right there.
(With the recent slowdown in inflation
Stopped reading right there)
Yeah.
An apple that was increasing at 10% per annum is now only increasing at 9.9%. THAT is the stunning analysis one is getting from the NYT. I’m so happy that inflation is slowing down. Problem solved. (sarc)
Reduce government salaries until the budget balances. Easy and fair solution.
They’re so desperate to spin
Slowdown in lies but still lies?
“The move to accelerate quantitative tightening (QT), as it’s referred to, is meant to further drain pandemic-era stimulus from the financial system and increase borrowing rates for long-dated assets to weaken inflation.”
That’s a full blown admission that libtards caused inflation with out of control giveaways.
For those that have eyes to see
As long as the sheep 🐑🐑🐑 don’t believe their lying eyes on high gas ⛽ prices and high food prices.
“stopped reading right there”
Why? The rate of inflation rise has slowed, the sentence is correct.
The federal government couldn’t even pay 10% interest on its debt and remain solvent if all of its income was spent on that debt. As the old debt matures and has to be replaced the result is going to be catastrophic.
Yes but it’s still spinning.
Sure gas is $3.35 now and had been 4.89.
That “slowing” is supposed to make me feel better even though gas was $2.18 at the end of President Trump’s term?
Comes off that way with “slowing” - meanwhile food prices are still climbing.
It “slowed” down from 9.1% to 8.7% YoY for one month. While it is technically correct they are pushing a false narrative that Diaper Joe somehow caused this insignificant .4% statistical blip.
Gas prices are down substantially. From $4.99 to $3.89 in my location. That’s down 22%.
That’s because oil prices are down, and oil affects almost everything we buy. So, things are improving, even though it seems to be against your wishes.
I don’t care about the Biden administration’s expected false narrative. I operate in reality. Prices will improve for most everything going forward because the oil price affects everything. The price is down from $120 (WTI) to $88.94.
That’s 25.8% worth of price improvement.
I think it’s temporary but at least enjoy it while you are getting it.
Improving?
Ha. Probably the shock is reducing consumption.
When Depression II hits prices on some things will come down.
(even though it seems to be against your wishes.)
Please.
If this disaster of an administration hadn’t occurred we’d be much better off with President Trump’s policies.
And maybe not sold SPR to the Chinese like Joe.
SPR oil I mean.
No, you are happy only when everything is bad, so in your mind, everything is bad. Inflation has to START down before it can GET down.
You would happier if it kept going up.
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