Nobel laureate economist Joseph Stiglitz has criticized the Federal Reserve for raising rates “too much and too quickly,” which he says has exacerbated inflation and employment problems. His recipe for fixing the situation is lower rates as drastically as they raised themstarting with a 50 basis point cut at the next meeting.
In an interview with CNBC, Stiglitz noted that sharp rate hikes to a clearly restrictive level have “exacerbated the inflation problem.” “We have a roaming problem, “That drives up prices and inflation,” he said. “Do you think raising interest rates and making it harder for builders to build more homes and for families to buy them is going to solve the housing shortage? No, it’s going to push in the opposite direction,” he said.
According to him, the root of the problem lies in the insistence on keeping interest rates at 0% for 7 years, between 2008 and 2015rather than slowly normalizing rates over this period. And this time, the Nobel Prize winner said, “They went beyond what was necessary and they’re putting the economy at risk for very little benefit.” “I think they’re not looking at things as deeply as they should,” he said.
Their conclusion is that rates should go down half a percentage point at once. “If I had a vote at the Fed, I would bet on a double cut, because I think they’ve gone too far.”
After today’s employment data, markets are giving a 57% chance of a 25 basis point cut and a 43% chance of a 50 basis point cut at the meeting in two weeks. Of course, the most likely option, according to investor bets collected by the FedWatch website, is that For November, at least three sales have already been accumulatedwhich means that if there is no double discount this month, there will be one in November.
