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What the Fed’s Rate Decision Will Mean for Markets | Andy Constan

Hidden Forces

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The Fed's Impact on the Consumer

The current US economy is much more services oriented than the purchasing and building of heavy things that if you drop hurt your foot. The transmission mechanism for interest rate hikes is basically twofold in terms of what it does to the consumer. When interest rates were zero, that did not encourage borrowing and consumption such that we had inflation. This is pre-COVID. And so that responsiveness to interest rates is an important aspect. But the Fed only has a couple of levers; they use what they have.

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