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26-09-2022, 09:36 AM
Obviously they do not think the high interest rate environment will be sustained beyond the short term
The current high interest rate is the Fed's only ammo to bring down hyperinflation. It is losing the fight because this runaway inflation is largely caused by
UNPRECEDENTED disruption & rerouting of the Russian energy supply to Europe, having a ripple effect on the whole world economy. The Fed can control money supply by hiking interest rate, but cannot control energy supply. Only the Russians can.
Once the Ukrainian conflict wraps up (dont worry, it is about to), Europe negotiate with Russia to restore Nord Stream to pre-war levels, energy prices will come down and so will inflation. Interest rate will come down.
The current high interest rate is the Fed's only ammo to bring down hyperinflation. It is losing the fight because this runaway inflation is largely caused by
UNPRECEDENTED disruption & rerouting of the Russian energy supply to Europe, having a ripple effect on the whole world economy. The Fed can control money supply by hiking interest rate, but cannot control energy supply. Only the Russians can.
Once the Ukrainian conflict wraps up (dont worry, it is about to), Europe negotiate with Russia to restore Nord Stream to pre-war levels, energy prices will come down and so will inflation. Interest rate will come down.
