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I'm increasingly partial to the argument that increases in the fed funds rate will do little to lower inflation, and may be counterproductive. - AI investment is unlikely to slow because interest rates are slightly higher - Energy is highly inelastic and rate changes can't alleviate the current supply shock - Higher rates hurt supply-side solutions in housing, energy, autos, and other capital intensive industries - Higher borrowing costs raise business operating expenses, some of which is passed along to consumers - A large percentage of debt is fixed-rate, dampening the feedback loop but hurting new homeowners, small businesses, and investment - An economy increasingly dominated by services is less sensitive to rate changes - This century has repeatedly demonstrated how blunt interest rate policy can be, both in stimulating inflation when it's low and suppressing it when it's high
johnarnold ↗