MACRO: "it needs be recalled what happened last time the
Fed was confronted with a 600+ basis point increase in the core PPI
inflation: Namely, Volcker raised the Federal funds rate by
1400basis points, not a mere 300; and it took all of six years to
finally bring inflation back to earth.
To be sure, we have no idea as to how high and how long the Fed
will require to bring inflation under control during this cycle.
But it will surely be far, far in excess of 300 basis points and
the pain will be spread over years, not months, as has been the
case to date."
MACRO: "it needs be recalled
Posted by brophy on 13th of Oct 2022 at 06:56 am
MACRO: "it needs be recalled what happened last time the Fed was confronted with a 600+ basis point increase in the core PPI inflation: Namely, Volcker raised the Federal funds rate by 1400 basis points, not a mere 300; and it took all of six years to finally bring inflation back to earth.
To be sure, we have no idea as to how high and how long the Fed will require to bring inflation under control during this cycle. But it will surely be far, far in excess of 300 basis points and the pain will be spread over years, not months, as has been the case to date."
David Stockman is always worth a read.
https://brownstone.org/articles/inflation-and-recession-are-becoming-entrenched/
brownstone.org
Inflation and Recession are Becoming Entrenched ⋆ Brownstone Institute