US Economics

US Economics

US Economics Weekly

14 July, 2017

What can past tightening cycles tell us about Fed policy?

Markets focused this week on supposedly dovish comments in Fed Chair Janet Yellen’s semi-annual testimony to Congress, but in truth she did little more than repeat the existing Fed line. As long as core inflation starts to rebound, we still expect a falling unemployment rate to convince Fed officials to continue hiking rates. Furthermore, recent history provides further reason to think that the Fed won’t wait for a more marked rebound in inflation before pressing ahead with further tightening.

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