Commentary Eight times a year the Federal Open Market Committee meets to review economic and financial conditions to determine the appropriate positions for monetary policy to maintain full employment and price stability. At its recent March 2022 meeting, the FOMC voted to raise the Federal Funds Rate to reduce aggregate demand in hopes to squelch rapidly rising inflationary pressures. Fed Chair Jerome Powell and the members of the committee seem confident they can reign in the inflationary forces while keeping the labor market at full employment. At the press conference, Powell repeatedly stated the Fed is prepared to aggressively raise interest rates this year and into next year as supported by the dot plots or projections by the committee members. The bond market has quickly determined that the Fed is making a massive policy mistake by tightening monetary policy. The evidence is in short-term Treasury yields, as short-term Treasury yields …
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