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Mike W's avatar

Which is more important, FOMC rates or Fed assets? If price inflation is resulting from the flood of money from QE, then isn't the better solution selling off the assets now? And why is the Fed still paying interest in reserves?

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The Rational Walk's avatar

I think they need to do both -- raising rates and QT. But as I listen to Powell's press conference as I type this, I get the sense that the Fed is in deep denial. For example, he is saying that a 3.5% fed funds rate at yearend would be restrictive. Which seems completely crazy.

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