Truth bomb time. Ex-Fed Reserve Vice Chair Clarida says rates must rise to at least 3.5%

Bloomberg (gated) with comments from the prior vice-chair of the Federal Reserve Richard Clarida.

Free to speak his mind now I guess.

  • Fed will need to raise short-term interest rates to at least 3.5% to bring surging inflation under control
  • “Expeditiously ‘getting to neutral’ will not be enough this cycle to return inflation over the forecast horizon back to the 2% longer-run goal,”
  • “The funds rate will I believe ultimately need to be raised well into restrictive territory, by at least a percentage point”

Comments extracted from remarks prepared for delivery to a Hoover Institution conference on Friday. More at that gated link above.

fed vice chair clarida

US major indices take it on the chin

Twenty-four hours ago, the markets were looking forward to a corrective move higher after the FOMC put 75 basis points off the table going forward. However, the broader Nasdaq and S&P were closing right around the 100 hour MA. The technicals were not in “clear sailing” seas.

Today, the indices opened lower and some pretty poor productivity data (worst since 1947) turned the buyers into sellers and that selling did not abate for most of the day.

The Nasdaq traded to a new 2022 low. The S&P remains above its lowest low for the year but was down over -3.5%. The Dow lost 1000 points.

The final numbers are showing:

  • Dow fell -1063.11 points or -3.12% at 32997.96
  • S&P fell -153.30 points or -3.56% at 4146.86
  • Nasdaq fell -647.15 points or -4.99% at 12317.70
  • Russell 200 fell -78.77 points or -4.04% at 1871.14.

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