“The FEd has the hammer all it has to do is keep going”: Fed official Bill Dudley yesterday.
8 months ago Billy Boy said a soft landing is very hard to achieve and the Fed Might Need to Force Stocks to Fall:
For the Fed to achieve its goal of 2% inflation guarantees a punishing recession next year. In order to do that Powell has to raise rates high enough to kill the economy and job market. Powell hammered home the strong job market and didn’t mince words when he said, “There’s an imbalance in the labor market between supply and demand,” noting that it will take a “substantial period” to get the labor market back in equilibrium.
Since 1960, every recession except the pandemic-induced downturn of 2020 kicked off with inflation running at 3.7% or hotter. And only in 1974 did the recession end with inflation higher than 2.7%.
Take Powell’s statements and the Fed’s forecasts together and it becomes clear the Fed is going to bring down inflation, and bring it down in a big way.
“Without price stability, the economy doesn’t work for anyone,” Powell said Wednesday.
And the path to that stability is 2% inflation and the only way to get their is kill the economy and labor market.
“There will be some softening in labor market conditions,” Powell said. “And I wish there were a completely painless way to restore price stability. There isn’t. And this is the best we can do.”
You have been warned.. Never Ever Bet against the FED