Paying Lip Service To Rate Hikes

The Fed are “unlikely to hike rates in June”, according to the people who’s sole decision it is to hike rates in June.

Is it supposed to make me comfortable that people with absolute discretion to make a decision talk about themselves from a probabilistic, 3rd party frame of reference? If I walked around these halls muttering “Cain is unlikely to stab someone today”, I imagine I would get admitted.

We’re at the point where we talk about rate hikes because that’s what we’re supposed to do. That’s professional of us, to pretend like we earnestly believe that rates are at any point in the foreseeable future set to rise. It’s professional courtesy, you see.

What’s not professional (and maybe just rude) is to state the obvious; rates aren’t going higher and the Federal Reserve isn’t in control of the ball anymore. It’s not just that they won’t raise rates. They cannot raise them.

Not being able to do something so simple as raise interest rates from the lowest they have ever been is disconcerting. It’s not comfortable to admit.

So a few times a year we get together and in very serious voices hold loud talks concerning whether the big rate hike is imminent. But that day isn’t coming anytime soon and deep down, each of us knows that.

And if, it should perchance, that a major correction should hit us in this state of affairs, all confidence in the Federal Reserve would be completely broken, they would become the butt of jokes, and major change would rip through the system.