The economy is recovering faster than had been expected as recently as this spring. Great reason to panic, apparently.
Federal Reserve officials signaled they expect to raise interest rates by late 2023, sooner than they anticipated in March, as the economy recovers rapidly from the effects of the pandemic and inflation heats up.
Their median projection showed they anticipate lifting their benchmark rate to 0.6% from near zero by the end of 2023. In March they had expected to hold it steady through that year.
This is bad news how?
Do you want interest rates at zero and emergency bond buying programs to go on forever, regardless of economic conditions? Have you been struck by lightning, sir? Fallen on your head in recent days?
“Progress on vaccinations has reduced the spread of Covid-19 in the United States. Amid this progress and strong policy support, indicators of economic activity and employment have strengthened.”
That’s Chair Powell, resetting expectations as he should. Ignore kneejerk stock market reactions and sudden swings in sentiment. Things are getting better, extraordinary stimulus is going away, rates will normalize.
I’ll be on CNBC’s Closing Bell today at 3:45pm today, bringing my own particular flavor of calm, rational market commentary to the table. Pull up a chair.