Euro Pacific Capital chief economist peter ship conducted a survey Twitter, ask what the federal reserve would suffice if inflation stays well above the 2% target, but higher interest rates cause another financial crisis.
“Will the Fed pinch and twist and send inflation to new highs, or will it stay tough and let the crisis unfold naturally,” Schiff asked in a poll he conducted on Twitter.
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Interestingly, 64.7% of the participants voted that the Fed would “slump”, causing prices to continue to rise and hit new highs. Only 35.3% of the participants believe that the central bank would stand firm.
However, economic data this month was not too encouraging. Tight labor market conditions and higher-than-expected inflation in December prompted markets to take a break from their January rally.
Price promotion: Major Wall Street indices closed over 1% lower than the core on Friday personal consumption expenses price indexthe Fed’s preferred measure of inflation, rose 0.6% in January and 4.7% year-on-year, beating a Wall Street estimate of 4.3%.
The SPDR S&P 500 ETF Trust SPY fell 1.07% on Friday while the Vanguard Total Bond Market Index Fund ETF BND 0.55% lost.
Fed officials have increasingly probed the need for further rate hikes. Last week, New York Federal Reserve Bank President John Williams said the central bank is keen to guide inflation towards its 2% target while Federal Reserve St. Louis president James Bullard stated that a relatively aggressive rate hike would now take place FOMC a better chance of curbing inflation.
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