bullish
When Rising Real Rates Are Not Dovish
Phil has highlighted this Insight as a Top Pick
433 Views07 Dec 2023 19:05
SUMMARY
- Some unrealistically academic policymakers worry that rising real rates from disinflation will excessively tighten monetary conditions. We firmly believe they are mistaken.
- Cost shocks eroded disposable income, but this real income and expenditure squeeze is fading. The income channel is far more important than the interest rate one.
- Uncertain policymakers should rely more on the data than misapplied theories. Resilient demand and persistent inflation would tell them to wait longer before cutting.
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