A Fed Rate-Hike Would Be A Serious Mistake
ZeroHedge ·
A Fed Rate-Hike Would Be A Serious Mistake Authored by Daniel Lacalle, The latest U.S. inflation report and jobs data do not justify another interest rate increase . Additionally, June data show that inflation is slowing down, especially in the core CPI measure that is most closely watched by monetary authorities, while ongoing tightening is stopping the labor market from reaching its full potential. Hiking rates while maintaining elevated liquidity harms families and small businesses and perpetuates the very factors that drive inflation, including rising money supply and government spending. Keeping rates above the neutral level has cost the U.S. economy nearly one million jobs, as small and medium-sized enterprises (SMEs) find it increasingly difficult to access credit and face prohibitively high borrowing costs. For investors, a 25-basis-point increase may seem insignificant, but for small businesses, it often means either no access to credit or excessively expensive borrowing rates. In the U.S., the average cost of debt for SMEs typically ranges from 6% to 12% APR, making it extremely difficult to hire new employees. A further rate hike under these conditions would suggest that the central bank is reacting to past fears rather than future evidence, risking an unnecessary slowdown just as the disinflation process becomes visible in the data. The June Consumer Price Index report delivered a clear positive surprise relative to consensus estimates. Headline CPI fell by 0.4% month-over-month, and the annual rate decelerated to 3.5%. More importantly for monetary policy, core CPI, which excludes food and energy, was flat for the month and slowed to 2.6% year-over-year, the lowest level since March 2021. A core inflation rate of 2.6% indicates that tariffs and the energy shock have had no meaningful impact on core goods and services. Underlying price pressures are gradually moving closer to target after a prolonged phase of tightening and normalization. Those still arg
AI 시장 분석
A rate hike by the US Federal Reserve would be a serious mistake for the US economy. Recent US inflation reports and job data do not provide a reason for a rate hike. According to June data, inflation is slowing down, particularly in the core CPI measure. Ongoing adjustments have not achieved the labor market's full potential. A rate hike maintains high liquidity, which hurts families and small businesses and continues to fuel inflation by supplying money and sustaining government spending. Rate hikes have cost the US economy nearly 10 million jobs. Small businesses face difficulties in accessing funds and bear exorbitant loan costs. The average debt cost of US small businesses ranges from 6% to 12% APR, making it very hard to hire new employees.
상승 영향
- Small Businesses — A rate hike makes it difficult for small businesses to access funds and burdens them with excessive loan costs, allowing them to perform well.
- Small Businesses — A rate hike can cost the US economy nearly 10 million jobs, making it easier for small businesses to hire new employees.
하락 영향
- Finance — A rate hike makes it difficult for small businesses to access funds and burdens them with excessive loan costs, which can weaken the finance sector.
- Small Businesses — A rate hike can cost the US economy nearly 10 million jobs, making it difficult for small businesses to hire new employees.
DYAX 전담 분석
The recent US inflation reports and job data do not provide a reason for a rate hike.
According to June data, inflation is slowing down, particularly in the core CPI measure.
Ongoing adjustments have not achieved the labor market's full potential.
A rate hike maintains high liquidity, which hurts families and small businesses and continues to fuel inflation by supplying money and sustaining government spending.
Rate hikes have cost the US economy nearly 10 million jobs.
The average debt cost of US small businesses ranges from 6% to 12% APR, making it very hard to hire new employees.
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