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Thomas L. Hutcheson's avatar

"If you thought at the start of this year that the Fed was behind the curve, and that it needed, through Fed-Funds rate increases and shifts in forward guidance, to do things with effects on long-term real interest rates that would be the equivalent of a 5%-point increase in the Fed Funds rate,"

At the START of the year I was pretty sanguine. They had started tightening in November rather than September but the 10 year (CPI) TIPS was only a bit above 2.3% (my guess at the equivalence to 2% CPE). This still looked like the Fed managing a bit of surprise COVID/supply chain shock. What I mainly wanted them to do was reiterate their average inflation target.

I only began to get worried in March when the 10 year TIPS rose to around 3%. I'm still relatively confident that the can get inflation back down without a real recession, but I really DO wish that they had started a couple of months sooner.

In principle I never have opinions about which instrument the Fed should move by how much. THAT is what it has a staff for.

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Steve Weinstein's avatar

hey I am not being a smart ass- I am really that bad at math.. but isnt this a 12 times normal gearing not 9? I took 3/.025 =12.. I really am that bad at this stuff.. Help?

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