% Firms Expecting Economic Improvement in the Next 6 Months
Real Investment Advice
The Fed tightened its administered Federal Funds Rate (the rate banks pay to borrow reserves) by 75 basis points (bps) (0.75 pct. points) to 1.50%-1.75%, a rate hike not seen since 1994. The issue here is that, for the first time in its 109-year history, the Fed is tightening into the teeth of a Recession. Back in 1994 when they tightened 75 bps, the economy was growing and they did manage to pull off one of those rare “soft landings.” That won’t occur this time because, by all indications, it appears that the Recession may have already begun. The only questions remain are “how deep” and “how long!” And that will be a function of how long the Fed keeps stomping on the financial brakes. Hopefully, the monthly inflation data will soon start to mellow (perhaps in July) which will give the Fed political cover to ease up…
