So with very high inflation now and the need and desire to get it under control as fast as possible the fed has to raise rates. Some are now talking about at least 100 basis points by June/July and a total of 6 to 7 rate hikes this year alone. This is somewhat reminiscent of what happened just before the “lost decade” in Japan, where in attempts to curb inflation, the brakes were put on too hard, too fast, causing deflation. Consumption went down and people started to save/ hoard money resulting in decreased prices, causing further saving and a deflationary spiral.
Thoughts?
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