Two Hikes in 2023 Caught Some People Off Guard: Joshua Younger

The video discusses the market's expectations versus the Fed's actions, highlighting the surprise of two rate hikes in 2023. It covers the uncertainty in inflation due to supply shortages and the Fed's cautious approach. The labor market is expected to recover, with risks more on the inflation side. The Fed's policy aims to maintain rates at zero through 2023, allowing inflation to run above target. Financial stability is monitored, with concerns about excess cash in the system and its impact on market stability.

What was the market's reaction to the unexpected rate hikes in 2023?

• The market anticipated the hikes accurately.

• The market was caught off guard.

• The market expected even more hikes.

• The market was unfazed by the hikes.

What is the main concern of the Federal Reserve regarding the labor market?

• The labor market is not recovering at all.

• The labor market is recovering too quickly.

• The labor market is causing inflation.

• The labor market will recover over time.

How does the Federal Reserve plan to handle inflation according to the post-Jackson Hole framework?

• By ignoring inflation concerns altogether.

• By keeping rates high to control inflation.

• By allowing inflation to run above target temporarily.

• By immediately reducing stimulus measures.

What is the Federal Reserve's concern if money market funds start turning away money?

• The cash will be lost in the system.

• The cash will be hoarded by banks.

• The cash will cause instability in other market areas.

• The cash will be used for unnecessary investments.

What strategy is the Federal Reserve using to manage excess cash in the system?

• Encouraging banks to hold more cash.

• Ensuring excess cash ends up back at the Fed.

• Increasing interest rates significantly.

• Reducing the purchase of securities.