“The Federal Reserve will have to raise its policy rate to 5% in order to get a grip on high inflation, according to Deutsche Bank. That defies any hope for a policy pivot in the near future.”
USAGOLD note: A couple quick observations…… if the inflation rate stays above 8% or goes higher, a 5% fed funds rate will not be enough to contain inflation. A policy pivot does not necessarily have to be the product of inflation being contained. It could be forced by a breakdown in the credit markets, as was the case in 2019, or a rapid meltdown in the stock market. The Fed meets mid-week with the interest rate decision and a press conference scheduled for Wednesday.
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