USRT - The Federal Reserve Could Risk The Economy By Being Stubborn With Interest Rates

2024-07-10 03:35:29 ET

Summary

• The Federal Reserve has come under scrutiny, forcing Powell to reassess his interest rate policy.
• Geopolitical risks and the brewing regional banking crisis could have more significant implications for the economy.
• Stress test results show banks have sufficient liquidity, but factors like credit card losses and riskier corporate credit portfolios pose challenges.
• We explore factors currently at play and how the Federal Reserve may pivot to tackle the challenges head on.

Over the coming years, history will be quick to judge Jerome Powell’s Federal Reserve and their interest rate policy. Presiding over one of the most difficult economies in the modern era, Powell and policymakers have taken unprecedented and controversial steps to control inflation while allowing the economy to continue growing. Putting aside accountability for a surge in inflation shortly after the pandemic era, we also must question whether the Federal Reserve’s decision to hold rates high while a combination of major economic risks brew at home and abroad is prudent. While the story has unfolded positively thus far, a tragic ending would rewrite history’s understanding of Jerome Powell....

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