Normalized interest rates are the cure, not the problem — via financialpost interestrates inflation
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The problem, however, is that markets appear to be dominated by momentum traders, speculators and algorithms, which are combining to drive exaggerated daily moves, both up and down. Fundamentals, unfortunately, are getting thrown out with the bathwater as markets gyrate based on whether some moving average has been broken to the upside or downside or on what the latest tea leaves tell us about the U.S. Federal Reserve’s determination to raise rates, despite the tantrums of the QE addicts who continue to warn tightening could spark another financial crisis.
This is where it helps to take a step back, take a deep breath and ask ourselves if moving interest rates to 2.5 to three per cent is really the end of the world, especially if it helps bring down some of the inflationary pressures.
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