The Fed raised interest rates too quickly

The President arrived swaying last week, pointing directly to the US Federal Reserve for its easing of economic data and the stock market debacle.

In fact, President Trump went so far as to say that the Fed was the "biggest risk" to the US economy.

He went so far as to blame Fed President Jerome Powell, stating in an interview last week: "It almost looks like he 's happy to raise rates. interest."

Many believe that it is politically taboo for a president to comment on rate hikes and measures taken by the Fed. Former President Alan Greenspan, who was chaired by four presidents, recently said that each administration told him it preferred low rates.

In addition, the president is right.

It's simple: the Fed has gone too far, too fast in raising rates.

And the effect of rising rates is minimal compared to the message of the Fed on the number of expected future movements – expectations always wrong.

The Fed has two mandates: to control the rate of inflation and to create an environment conducive to full employment.

The current rate of inflation, as measured by the gross domestic product report released last Friday, was up 1.6% on an annualized basis, a level below the 2% level sought by the Fed.

Remember that we have been through a slow decade in which wages and prices have significantly exceeded the 2% level.

And it seems paradoxical that the Fed cites a labor shortage as a reason to raise rates.

What is the first thing that an employer will do if the costs of his business increase due to higher borrowing costs? It will delay the hiring of new employees.

Do this to 10,000 companies and you will see an increase in unemployment.

What the Fed is really achieving with its forecast of four rate increases by 2019 is to reduce inventory and housing prices, which are just back to what they were 10 years ago.

The S & P 500 is down more than 20% from the peaks this year, as rates and rates have a negative impact.

Let us not forget that the US Federal Reserve has always been wrong to err in inflation and has completely exceeded its target, which has thrown the economy into the doldrums.

Hopefully, Powell can learn from his story, stop growth rates on a capillary trigger and take a little time to evaluate the effect of a hike.

He can always come back and come back to the issue of inflation in 2019.