Frankly I agree, and think it was part of their plan. Sort of. They needed to cool inflation after printing money in huge amounts. Only now they got caught with an over-correction problem that nearly (and still might) cause a 2008 style meltdown.
I don’t believe at all that hiking interest rates this fast was something the Fed thought would not put banks in bad positions that would need risk mitigation and capital raises. If they didn’t know that, they must be abhorrently oblivious. So let’s assume they realized that rapid rate increases would affect certain “safe” investment vehicles and those would be a loss, and some banks would have over exposure. What would the Fed do? Not raise rates? Or take the risk, see what banks were vulnerable, and deal with it then. I feel like the latter is the simplest answer, unfortunately.
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[ 4.0 ms ] story [ 23.7 ms ] threadI don’t believe at all that hiking interest rates this fast was something the Fed thought would not put banks in bad positions that would need risk mitigation and capital raises. If they didn’t know that, they must be abhorrently oblivious. So let’s assume they realized that rapid rate increases would affect certain “safe” investment vehicles and those would be a loss, and some banks would have over exposure. What would the Fed do? Not raise rates? Or take the risk, see what banks were vulnerable, and deal with it then. I feel like the latter is the simplest answer, unfortunately.