Taps Coogan – August 13th, 2022

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Dr. Ed Yardeni, creator of the highly informative website Yardeni Research and author of ‘In Praise of Profits,’ recently spoke with CNBC about his outlook for monetary policy for the rest of 2022.

 

Some excerpts from Ed Yardeni:

“We’ve basically experienced what I would call a growth recession. There really hasn’t been any growth in the first half of the year and that might be the case in the second half of the year…”

“In the pricing environment, there are some indications that things are moderating… The Federal Reserve Bank of New York put out its July survey of consumer expectations for inflation and they moderated quite significantly… but not enough to really dissuade the Fed…”

“Let’s keep in mind that quantitative tightening… will be much more aggressive… starting in September and that is equivalent to tightening. I think QT is equivalent to at least a 50 basis point rate hike in the Fed Funds rate and a strong dollar, the same thing… I do expect one more increase of 75 basis points at the end of September and then that’s when they might pause…” 

Let’s hope they pause as QT is likely to going to prove much more impactful than changes to the Fed Funds rate, a rate that has become less and less relevant in our excess bank reserve regime. 

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