Just a few months ago, Mohamed El-Erian was decrying a “paradox of financial conditions” as he called them. Writing in the Financial Times, El-Erian was speaking for quite a lot of establishment types, Economists mostly, who were perplexed by the misbehavior across the markets. The Fed like the ECB was trying to fight inflation, yet that fight was allegedly being undone by falling interest rates.
Both the Fed and ECB raised their policy benchmarks each by another quarter point just this week, continuing programs dating back to at least the middle of last year. For the American pseudo-central bankers, they’re up five hundred basis points since beginning on their consumer price quest last March. The ECB, getting started in July, officials there will modestly trail their counterparts with 375 bps of hikes when the latest becomes effective next week.
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