Fed rate increases end economy’s free ride

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The Federal Reserve Board, as many of you know, is widely expected to announce on Wednesday that it’s raising interest rates by three-quarters of a percent. That would be the second such increase in two months — and 1.5 percent over two months is a very, very big deal by Fed standards.

Not since the days of former Fed chairman Paul Volcker combating inflation 40 years ago by tanking the economy to wipe out double-digit inflation have we seen anything remotely resembling what the Fed is doing these days.

This week’s expected rate hike, which is likely to be followed more hikes, will be yet another sign that the free ride that the economy got when the Fed cut interest rates to zero in March 2020 to combat the financial and social dislocations caused by the pandemic downturn has come to an end.

Freaking out about the economy? Let’s talk.

The rate cut, an emergency move to help combat the coronavirus’s impact on the economy…

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