Whether to raise interest rates or not is no longer a mathematical problem, or even an economic one—it has become a political one.
#CPI数据来袭能否触发9月加息
Inflation rates and interest rates are not simply correlated. The inflation caused by oil prices is driven by the supply side, raising costs.
Raising interest rates cannot solve the problem; at best, it can curb expectations of wage increases and prevent wage costs from rising. But at the same time, high interest rates increase companies’ financing costs.
So all one can say is that, when faced with inflation and interest-rate hikes, it is a directionally "correct" approach.
Especially during the midterm election period, in response to Trump’s calls for action, the Fed raising rates can demonstrate the Fed’s independence and political correctness…
#CPI数据来袭能否触发9月加息
Inflation rates and interest rates are not simply correlated. The inflation caused by oil prices is driven by the supply side, raising costs.
Raising interest rates cannot solve the problem; at best, it can curb expectations of wage increases and prevent wage costs from rising. But at the same time, high interest rates increase companies’ financing costs.
So all one can say is that, when faced with inflation and interest-rate hikes, it is a directionally "correct" approach.
Especially during the midterm election period, in response to Trump’s calls for action, the Fed raising rates can demonstrate the Fed’s independence and political correctness…
