Oh No: The Fed Is Making Another Big Mistake!

Are Fed officials making another big mistake? They were behind the inflation curve during 2020 and the first half of 2021 because they prioritized lowering the unemployment rate relative to keeping inflation down. Now they are scrambling to get ahead of the inflation curve, or at least catch up with it. So they raised the federal funds by 75bps at each of the last three FOMC meetings to a range of 3.00%-3.25%.

The committee's latest Summary of Economic Projections showed that they are expecting to raise the rate to 4.40% by the end of the year. That caused the 2-year Treasury note yield to jump over 4.00% and the 10-year Treasury bond yield to approach that level rapidly in recent days. The stock, bond, commodities, and forex markets are saying that's too much, too fast (charts below).