Opinion: The Fed is ready to choke the US economy to kill inflation | Stephen Bartholomeusz
The conversion of the US Federal Reserve Board’s rate-setting committee’s members from doves to hawks is complete, with the Fed now pursuing an ultra-aggressive interest rate trajectory to tame the rampant inflation in the US.
“We have to get inflation behind us. I wish there were a painless way to do that. There isn’t,” he said at the press conference that followed the meeting. The simultaneous slowing of the world’s three biggest economies and the global tightening of monetary conditions that the Fed is now leading makes it increasingly likely, perhaps inevitable, that there will be a global recession.
The pace and extent of that fall adds to the pressure on the RBA to keep raising the cash rate. The Fed may not dictate global monetary policies, but it heavily influences them via the interest rate differentials and currency relativities.Wall Street fell, again on Wednesday, after concluding that the Fed was singularly focused on bringing down the inflation rate and that orchestrating a soft landing is now a far lesser priority.
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