Should the Fed cut now? That is what former Fed economist Claudia Sahm says.

Here is a Tweet that caught my eye.

What exactly is the Fed waiting on? Cut.

The consensus is that core inflation gets a 2-handle on Friday. Total has had it for a while. Powell has repeatedly said that the Fed would not wait until 2% to cut. Hello??? pic.twitter.com/ru9ubU96on

— Claudia Sahm (@Claudia_Sahm) January 23, 2024

What exactly is the Fed waiting on? Cut.

The consensus is that core inflation gets a 2-handle on Friday. Total has had it for a while. Powell has repeatedly said that the Fed would not wait until 2% to cut. Hello???

Hello Claudia!

Perhaps a few questions will answer your question.

• How about data?
• Is the Fed supposed to act on consensus opinion?
• Is approaching the target good enough?
• Core only?
• With housing prices and the stock market blistering?
• Doesn’t anyone ever look at asset bubbles?
• Hello???

Hello!!! Do my questions answer your questions?

Asymmetrical Policy

Failure to take asset bubbles into consideration is a huge ongoing problem.

So is asymmetrical policy of cutting at the first sign of trouble while delaying hikes until inflation is obvious to everyone.

Stoking Inflation With More Stimulus

Meanwhile, President Biden is doing everything possible he can to stoke inflation. More stimulus is on the way, including student loan forgiveness and child tax credits.

On January 19, Biden openly flaunted the Supreme Court with more inflationary as well as unconstitutional student loan forgiveness.

Wages have been soaring.

And to top it off, the Republicans agreed to more free money child tax credits.

For discussion, please see How Much Will That GOP Deal on Child Tax Credits Really Cost?

Hoot of the Day

Now we have a proposal to cut rates, not based on data, but on consensus opinion with rates above target, while asset bubbles brew, and more inflationary stimulus is in the pipeline.

Hello! What a hoot!

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