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- Even Higher for Longer if Markets Keep Fighting Central Banks, ECB’s Wunsch Explains. The Fed Has Same Problem.
Even Higher for Longer if Markets Keep Fighting Central Banks, ECB’s Wunsch Explains. The Fed Has Same Problem.
by Wolf Richter Wolf Street
“If the markets don’t infer from this that it’ll be high for longer, we’ll have to use our rate instruments and hike to get where we want to go.”
Rate-cut bets have been piling up and getting moved closer, as everything that central bankers say – no matter what – is either being interpreted as “dovish” or is being brushed aside. The “Powell-was-dovish” mantra has been getting spread across the internet after every FOMC press conference since June 2022. In early 2022, just as the Fed had started hiking, rate cuts for later in 2022 were already being bet on. Then came the bets for rate cuts in 2023, and now there’s only one meeting left, and still no rate cuts. So the heavy breathing about rate cuts has shifted to 2024, and the cuts are getting bigger and closer.