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The Fed Will Hike to 4 Percent Come Hell or High Water

Let's tune into some interesting statements by former Fed Vice Chair Richard Clarida and his ducking of questions on the Fed's role in this mess.
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Clarida Hell or High Water

Image of Richard Clarida from video below

Image of Richard Clarida from video below

Credibility Problem and Disconnect

Richard Clarida on Squawk Box

Q: Is the fed data dependent or are they going to 4% come hell or high water. 

Clarida Response

  • I think they are going to 4% hell or high water if I had to put it into two boxes.
  • Inflation is way too high. Inflation was way too high last year. 
  • Until, inflation comes down, the Fed is really a single mandate central bank.
  • They are data dependent but the inflation data is too high. So I think they are going to at least 4%. 
  • I agree it's not a great place to be in. If it was just Putin, you are right. But unfortunately the economy is out of balance now. 

Clarida ducked hard questions on the Fed's role in this mess while admitting he got the inflation picture wrong.

Clarida also supported fiscal stimulus, the last round of which was the big problem. 

No one at the Fed saw this coming and they ridiculously kept kept QE going all the way to March of 2022.

So yes, the Fed has an enormous credibility problem and Powell understands that. 

As a direct consequence, the Fed is highly likely to make a mistake in the opposite direction. 

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This post originated at MishTalk.Com.

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