Back in August, Powell vowed to raise interest rates to tame inflation “until the job was done.” And this week’s Consumer Price Index (CPI) numbers show that the job is nowhere close to the finish line. Inflation rose at an annualized rate of 8.3% in August.
This all but guarantees the Fed will make its third consecutive 0.75% rate hike next week.
One increase in interest rates alone is bad. But with each monster hike, the risk grows that the Fed pushes us into recession (if we aren’t already there) … and creates that worst of all possible worlds — stagflation, where the economy slows in tandem with high unemployment and rising prices.
But this does give us an opportunity to step back and look at the big picture and consider what kind of dividend strategy makes sense in a world of rates in rapid ascent.
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