Next Evolution In Fed Thinking

Clifford Bennett, Chief Economist at ACY Securities highlights the positive news that the Federal Reserve seems inclined to take a pause in its aggressive interest rate tightening cycle. This development is seen as a significant relief for the market, providing a respite from potential interest rate hikes. However, Bennett suggests that it is more likely for the Federal Reserve to raise rates following a brief pause, rather than initiating rate cuts.

While Bennett argues that the Federal Reserve may have already raised rates excessively, he notes that the Fed seems unaware of the nuances of the new form of inflation, which differs from historical patterns. He suggests that raising rates may inadvertently contribute to inflationary pressures, as the Fed failed to recognize the consequences of keeping rates near crisis-zero for an extended period.

Furthermore, Bennett highlights the ongoing banking crisis, which he believes could escalate into a larger and more significant event than what has been witnessed thus far. He points out the lack of appetite in Washington to roll back the policy of providing 100% protection for "banks too big to fail," contributing to a potential crash scenario.

Join Clifford Bennett as he delves into these pressing economic matters and sheds light on the complexities and challenges faced by the financial system. Gain a deeper understanding of the debt ceiling resolution, the Federal Reserve's stance on interest rates, and the ongoing banking crisis.

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