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Thursday, March 28, 2024

Why is the Fed So Desperate to Hike?

Courtesy of Mish.

Yellen’s speech today in Jackson Hole shows a Fed that appears desperate to hike rates. Why?

Here are the last four quarters of GDP.

  • 3rd Quarter 2015: 2.0%
  • 4th Quarter 2015: 0.9%
  • 1st Quarter 2016: 0.8%
  • 2nd Quarter 2016: 1.1%

It’s highly unlikely the Fed believes 1% is the new normal for robust growth. So why is it so desperate to hike rates?

Top Reason Fed Wants To Hike

1. Asset bubble worry

2. Strong jobs inflation

3. So it can cut later

4. Fed clueless

— Mike Shedlock (@MishGEA) August 25, 2016

No Confidence

Despite wanting the hike, a Yellen slide from the Jackson Hole symposium shows the Fed has little confidence that it will hike.

Jackson1

For details please see Yellen Discusses “Tools”: She’s 70% Confident That Rates will Be between 0 and 4.5% in 2018.

Mike “Mish” Shedlock

[Originally published at MishTalk.]

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