40-year Fed monetary tightening; financial markets thrive despite 23-year high US interest rates.
In the most aggressive Federal Reserve monetary tightening in four decades, financial markets continue to thrive despite 23-year high US interest rates. Key reasons include: 1) the Fed holding the policy rate steady for a year, 2) limited impact of regional-bank failures, and 3) tight credit spreads and low volatility. Markets digest "restrictive" policies well, avoiding widespread economic disruption.
June 09, 2024
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