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For Jackson Hole: Using MBS, The Fed Can Slow The Economy With Fewer Rate Hikes
The Fed, led by Chairman Powell, will very likely resist any effort by the White House to pressure it into halting rate hikes. However, it is hard not to sympathize with the argument that higher interest rates are causing the USD to become very strong, with the major possibility of becoming even stronger, which will make the US economy less competitive in global markets and unable to reduce its trade deficit. How can the Fed reconcile this problem and the same time address a crucial inflationary issue, namely housing prices, that could easily destabilize financial markets in the future? Clearly, the US housing market ... (full story)