A new type of bull on Wall Street

IN January, virtually all investors were caught off-guard when it became apparent that the Federal Reserve (Fed) would raise interest rates seven times this year. At that time, however, the belief still was that the US central bank would use the standard steps of 0.25 percentage point per hike. If I remember correctly, I noted in April that the US central bank rate could reach 3.0 percent at the end of the year. After the last interest rate increase, the rate is now already at 2.5 percent and 3.0 percent will soon become a reality.

Many central banks have fallen behind in raising interest rates, which again explains the aggressive moves from the Fed (Federal Reserve). But this time is different, and throughout the first half of the year, the Fed itself has recognized the need for very drastic steps. The usual cautious behavior with gradual impacts on the economy has been abandoned this time. It has been concluded that part of inflation is precisely due to low output in the economy and therefore the Fed will provoke a demand shock. They simply want to smash some economic china to force a slowdown in growth.