Fed Pivot Isn’t an Investment Thesis

Fed Pivot Isn’t an Investment Thesis
The exterior of the Marriner S. Eccles Federal Reserve Board Building is seen in Washington, D.C., on June 14, 2022. Sarah Silbiger/Reuters
Daniel Lacalle
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Commentary

In a recent Bloomberg article, a group of economists voiced their fears that the Federal Reserve’s inflation fight may create an unnecessarily deep downturn. However, the Federal Reserve doesn’t create a downturn due to rate hikes; it creates the foundations for a crisis by unnecessarily lowering rates into negative territory and aggressively increasing its balance sheet.

Daniel Lacalle
Daniel Lacalle
Author
Daniel Lacalle, Ph.D., is chief economist at hedge fund Tressis and author of the bestselling books “Freedom or Equality” (2020), “Escape from the Central Bank Trap” (2017), “The Energy World Is Flat”​ (2015), and “Life in the Financial Markets.”
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