Odd Lots Where Things Stand Now With Inflation and the Fed
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Dec 19, 2022 Jon Turek, founder of JST Advisors and author of the Cheap Convexity blog, joins Tim Duy, Chief US Economist at SGH Macro and an economics professor, for an engaging discussion on inflation and the Fed. They analyze the recent CPI report showing cooler inflation and the Fed's shift to a 50 basis point hike. The guests explore the challenges of monetary policy, labor market dynamics, and the global economic impact of recent central bank actions, emphasizing the importance of adapting investment strategies in this uncertain landscape.
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Fed's Commitment to Restrictive Rates
- The Federal Reserve is committed to holding interest rates at a restrictive level.
- This approach may induce a recession, despite current disinflationary trends.
Fed's Shift in Focus
- The Fed is shifting its focus from determining the terminal rate to determining how long to maintain it.
- They seem open to smaller rate hikes starting in February.
Defining Restrictive Policy
- The term "restrictive policy" lacks a precise definition.
- It aims to create downward pressure on the labor market and reduce wage growth.