Are the Fed’s actions to tame inflation working?

She recalled when she first entered the workplace in earnest: “When I started in business 40 years ago, I was selling single-year adjustables in the mid to high teens but people were buying and that was the normal then and that was the rate market. No-one was happy about higher rates, but the economy was moving and functioning – not as well as it does during lower rate environments, but people were buying.

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“And as interest rates came down, buyers became more enthusiastic about getting into the marketplace because obviously if you were going to borrow money to buy a home, the lower the rates the more mortgage you could get, the further you could stretch to buy a new home and people were buying at a 12% environment, at a 10% and at 8%. We’ve lost sight of history.”

Her support of Powell’s moves aren’t new, having previously described to MPA why she believes in the tinkering of rates by the Fed: “There are clear signs that it’s working,” she said. “You have to remember that historically it takes six months for each rate hike to work its way into the economy and start to have impact. The Fed never waited for the first six months to pass to see if one rate hike would work and continuously raised rates all year long.”

Oh, and she went there: “People have very short-term memories,” Cohn said. “I think we need to remember we were in a 3% rate environment because of COVID.”

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