In June, the US Federal Reserve raised the cash rate for the seventh time since 2015. No sooner had it announced the news, than the market immediately factored in another two rate rises before Christmas.
Usually, a series of rate increases like this happens as an economy is growing apace. That is, when the economy is growing at full stream.
The idea being that a higher cost of money reduces demand. Not only with increased borrowing costs for businesses, but consumers spending less as they have less money in their pockets.
Getting the timing right is no easy feat
As we know, though, getting the timing right is no easy feat. Raise rates too early, and you kill the economy just as its getting on its feet.
Raise rates too late, th…
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