The World's Borrowing Cost Hits 15-Year High As Powell Says No Recession Until 2027
The World's Borrowing Cost Hits 15-Year High As Powell Says No Recession Until 2027
Fed cries no recession while Powell sounds like he knows he broke something.
Dear readers,
Interest rates here in the United States are at multi-decade highs. The Federal Reserve’s unelected board of elders just held its interest rate target in the 5.25-5.50% range as the 2-year and 10-year US Treasury yields soar to 17 and 15-year highs respectively, squeezing both short and long-term borrowers alike, the whole world over. Powell still insists that a recession is years away, but takes a “soft landing” off the table for the US economy. Let’s talk about it.
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The Fed’s decision to not hike rates this meeting is the second of two no-actions so far this cycle. Since June, the hike-skip approach to FOMC meetings has been the strategy du jour—hiking interest rates but at a slower pace.
Powell came out with a decidedly familiar speech using the same words with minor tweaks to reflect a Fed closer to its end target than months prior.
US economic resilience was cited in Powell’s remarks and the Fed’s written note, while Powell eerily noted that sufficient monetary restrictiveness had yet to be felt but the US economy would “know it when we see it.”
Translation: the game plan is economic turmoil.