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

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.

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.

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

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