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Revenge of the Variable-Rate Commercial Debts
by Wolf Richter Wolf Street
Most people in finance today cut their teeth in the era of Easy Money, when history books were thrown out the window. But that era is over.
The good old Federal Reserve is now talking about hiking its policy interest rates toward 6%. Measures of underlying inflation have not come down in about seven months; what has come down a lot are energy prices; and they have pulled down overall inflation measures, such as the headline CPI. But core inflation and services inflation remain red hot.
In terms of the Fed’s policy interest rates, the top of the range is already 5.25%. The Fed is now talking about more rate hikes on top of that. There are not many people left in finance that were already decision-makers in finance last time the Fed was hiking rates in direction of 6% under the strain of red-hot inflation.