Blog: Is a Fed "pause" good news or bad news?

Once again we’re hearing that the end is near for Fed tightening.  It’s hard to say whether that's a good thing or a bad thing.

The optimists say:

    1) Inflation has fallen significantly from its highs by most measures,

    2) Credit conditions have tightened in the wake of the SVB failure, and

    3) Economic growth slowed in Q1.

    4) So Inflation is surely coming under control.

But there are a lot of negatives to contradict this:

   1) Employment and wages remain strong,

   2) The economy appears resilient, and

   3) Disinflation is slow and may settle well above the Fed’s 2% target.

   4) Only a significant rise in unemployment will stop inflation.

Interestingly, these pros and cons are coming from the members of the FOMC themselves.  The FOMC has been unusually unified this cycle, but it looks like they're splintering into hawks and doves.  That in itself is one sign that the end may be nigh for interest rate hikes.  At least for a while.