The Fed made the right call with rate hikes

The Fed made the right call with rate hikes

When the Federal Reserve raised the federal-funds rate by a quarter of a percent, President Trump fumed and the S&P and Dow Jones plummeted. But the Fed made the right call. It alone has a responsibility to use rate hikes to ward off economic overheating and the emergence of bubbles. Artificially low interest rates distort investment markets. In the ’90s, it was tech. In the 2000s, it was housing. Today, it could be leveraged loan debt and another housing bubble. The current trade war is the real culprit behind turbulence in the financial markets and uncertainty about the real economy.

 

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