Where do you project the Fed Funds rate will peak at? Many talking heads seem to think 4.5 percent.
I see the Fed funds rate going to or over 7 percent before peaking. Perhaps close to double digits. I see the current situation as worse than the 70s and I personally see no evidence of inflation abating at all - everyone is doing whatever they want regardless of the cost - possibly on the theory that they better spend what they have now before it is worth less later and/or because they recognize hard times coming ahead so this is the last one-for-the-road blow~OUTT before the bar closes and the party ends.
There are a lott of Boomers who see their nesteggs devaluing and the spectre of age, poor health, decrepitude, and death in the headlights so they are going to party now and do the bucket list now, using the diminishing value of their assets before before daddy takes the T-bird away. A least they will have memories and stories to tell the nursing home attendants later.
I cannot say that I blame those who are pursuing that gameplan. COVID woke a lot of folks up to the flightiness of life and its shortness. Live for today because tomorrow may never come.
With the massive asset base of the Boomers and a lot of early retirements, and a very tight labor market, that is a prescription for durable and painful inflation, and it will require a very muscular Fed funds rate and time to even throttle it down to 5 percent annual CPI.
Those are my thoughts.
AI
