Greenwich Endeavors's blog

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The Fed just raised the Fed Funds rate by 25 bps to 1.25%.  However, long term rates rallied by 50 bps!  Mohamed A. El-Erian, bond market veteran and specialist wrote today that the Fed should continue to raise rates “and that policy makers should take seriously the growing risk of future financial instability, especially in the absence of a carful normalization”.

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The Federal Reserve has pursued the unprecedented monetary policy of lowering rates to zero and increasing their portfolio from 500 billion to over 4 trillion.  But as the Fed reminds us, there is a cost.