The Federal Reserve Has Lost Its Bearings, Which Means It Could Accidentally Raise Interest Rates Too Much; Investors Are Now the Most Bearish on Global Economy Since Crash

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The Fed risks raising interest rates too much as the compass spins wildly

Federal Reserve Chairman Jerome Powell is in an unenviable position. Folks expect him to fine-tune interest rates to keep the economy going and inflation tame but he can’t make things much better — only worse.

Growth is nearly 3% and unemployment is at its lowest level since 1969. What inflation we have above the Fed target of 2% is driven largely by oil prices and those by forces beyond the influence of U.S. economic conditions — OPEC politics, U.S. sanctions on Iran, and dystopian political forces in Venezuela and a few other garden spots.

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When the current turbulence in oil markets recedes, we are likely in for a period of headline inflation below 2%, just as those forces are now driving prices higher now.

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Market Sell-Off Could Get ‘Significantly Worse’ This Week

BNY Mellon’s chief currency strategist says ongoing sell-offs echo the 1987 market crash.


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