Yes. For the longest time everyone was saying there’s no way the fed can raise rates above 2% without completely crashing the economy because the entire world was “addicted to low rates”. Whatever happened to the crash?
Recessions usually follow at least 6 months after the Fed hits their terminal rate.
The lag is also easy to understand since interest rates don't immediately hit businesses borrowing cheap money short, until their loans rollover and readjust on a roughly 1-2 year schedule. The economy can also absorb the first waves of those failures and it just takes awhile for the volume to build up.
seizethecheese|3 years ago
lamontcg|3 years ago
The lag is also easy to understand since interest rates don't immediately hit businesses borrowing cheap money short, until their loans rollover and readjust on a roughly 1-2 year schedule. The economy can also absorb the first waves of those failures and it just takes awhile for the volume to build up.