This shows a level of confidence in the banking sector that I find questionable. Risks associated with raising bond interest rates were one of largest factors in the recent bank failures. Surely more bank failures would be seen as worse for the economy than inflation.
If more, larger banks fail in the next twelve months then the Federal Reserve will be sheepish about raising interest rates for the next hundred years. In inflation stays high then it seems likely the Federal Reserve will keep pushing those interest rates higher and higher until something breaks and we enter crisis mode.
Personally, I'd like to see Congress take more action to reduce inflation. Ideally I think the answer is some combination of raising taxes and reducing federal spending, to start to decrease the amount of cashflow. I think some activity on their front can have an impact without introducing the same types of banking risks associated with raising interest rates, and we'll see better results with less negative impact. Of course, given the contents of the Inflation Reduction Act this seems unlikely. The legislative and executive branches seem content to leave inflation to the Federal Reserve, as it absolves them of responsibility.
If more, larger banks fail in the next twelve months then the Federal Reserve will be sheepish about raising interest rates for the next hundred years. In inflation stays high then it seems likely the Federal Reserve will keep pushing those interest rates higher and higher until something breaks and we enter crisis mode.
Personally, I'd like to see Congress take more action to reduce inflation. Ideally I think the answer is some combination of raising taxes and reducing federal spending, to start to decrease the amount of cashflow. I think some activity on their front can have an impact without introducing the same types of banking risks associated with raising interest rates, and we'll see better results with less negative impact. Of course, given the contents of the Inflation Reduction Act this seems unlikely. The legislative and executive branches seem content to leave inflation to the Federal Reserve, as it absolves them of responsibility.