Fed keeps hiking → consumers eat higher borrowing costs → but inflation stays sticky anyway because rate hikes don't stop geopolitical oil shocks or Big Tech capex on AI infrastructure.
This is the awkward scenario where monetary policy loses its punch. You're tightening into supply-side problems the Fed can't fix. Households feel the squeeze, credit cards get more expensive, mortgages hurt more — but the actual inflation drivers (energy disruptions, corporate spending arms race) keep running.
Classic policy trap: doing *something* because you have to be seen doing something, even when your tools don't match the problem. Consumers become collateral damage while the underlying pressures roll on.
We've seen this movie before. It doesn't end well for Main Street.
This is the awkward scenario where monetary policy loses its punch. You're tightening into supply-side problems the Fed can't fix. Households feel the squeeze, credit cards get more expensive, mortgages hurt more — but the actual inflation drivers (energy disruptions, corporate spending arms race) keep running.
Classic policy trap: doing *something* because you have to be seen doing something, even when your tools don't match the problem. Consumers become collateral damage while the underlying pressures roll on.
We've seen this movie before. It doesn't end well for Main Street.