My take: Can the Federal Reserve engineer a
soft landing for the US economy?
Following well-deserved criticism for clinging to ultra-accommodative monetary policy for far too long, the Federal Reserve (the Fed), in its Dec. 15 meeting, finally acknowledged that surging inflation was not a transitory phenomenon and indicated that some degree of monetary tightening will be required to restore price stability. Even some dovish Fed officials displayed a welcome pivot in their stance and seemed open to early rate hikes.
The Fed, however, faces multiple challenges as it aims to engineer a soft landing for the U.S. economy in 2022. First, a sustained period of near-zero policy rates and the extraordinary amount of liquidity that the Fed has been pumping into the financial system since March 2020 have contributed to speculative fervor and a spike in asset prices. Ending the Fed’s asset purchase programs and initiating rate hikes will bring about a much-needed resetting of valuations. How smoothly the process plays out is, however, anyone’s guess.
The Stock Market Is Too Narrowly Focused
https://www.bloomberg.com/opinion/articles/2022-01-03/the-stock-market-is-too-narrowly-focused
It's All Uphill from Here for Corporate America
https://www.bloomberg.com/opinion/articles/2021-12-31/it-s-all-uphill-from-here-for-corporate-america
U.S. Housing Crisis Only Gets Worse as Population
Shrinks
https://www.bloomberg.com/opinion/articles/2021-12-31/u-s-housing-crisis-will-only-get-worse-as-the-population-shrinks
Inflation? There’s Another Explanation for Rising Housing Costs
https://www.bloomberg.com/opinion/articles/2021-12-20/inflation-there-s-another-explanation-for-rising-housing-costs
Following well-deserved criticism for clinging to ultra-accommodative monetary policy for far too long, the Federal Reserve (the Fed), in its Dec. 15 meeting, finally acknowledged that surging inflation was not a transitory phenomenon and indicated that some degree of monetary tightening will be required to restore price stability. Even some dovish Fed officials displayed a welcome pivot in their stance and seemed open to early rate hikes.
The Fed, however, faces multiple challenges as it aims to engineer a soft landing for the U.S. economy in 2022. First, a sustained period of near-zero policy rates and the extraordinary amount of liquidity that the Fed has been pumping into the financial system since March 2020 have contributed to speculative fervor and a spike in asset prices. Ending the Fed’s asset purchase programs and initiating rate hikes will bring about a much-needed resetting of valuations. How smoothly the process plays out is, however, anyone’s guess.
https://www.bloomberg.com/opinion/articles/2022-01-03/the-stock-market-is-too-narrowly-focused
It's All Uphill from Here for Corporate America
https://www.bloomberg.com/opinion/articles/2021-12-31/it-s-all-uphill-from-here-for-corporate-america
https://www.bloomberg.com/opinion/articles/2021-12-31/u-s-housing-crisis-will-only-get-worse-as-the-population-shrinks
Inflation? There’s Another Explanation for Rising Housing Costs
https://www.bloomberg.com/opinion/articles/2021-12-20/inflation-there-s-another-explanation-for-rising-housing-costs