Tough week for economic decision-makers. The Fed meets today and tomorrow.
Markets expect the Federal Reserve to raise rates by 25 basis points, bringing the benchmark rate to a target range of 3.75% to 4.00%.
Like I said in a comment on Mark Zandii’s post
I think this is a mistake. Inflation remains high because of energy prices. Neither of which is due to overall demand. It’s war- and AI-induced. Increasing interest rates will hurt everyone. It might help a bit with AI's demand for energy, but it won’t change energy prices driven by the war.
The Fed is in a tight spot; they have to raise interest rates to show they mean business on inflation, but the rest of the market will be impacted by that decision.
This is a test for Chair Warsh; let's see how it plays out.
