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James E. Thorne argues that it takes at least 18 months for a rate hike to affect the real economy.
He notes that inflation expectations are currently well anchored, with 1-year inflation breakevens down 44% and standing at 1.4%. Thorne questions the rationale behind calls from Keynesians at the Federal Reserve for further rate hikes given these developments.
Thorne has previously commented on strong corporate performance, noting that the S&P 500 reported nearly 22 percent earnings growth. He has also called for decisive measures from the Bank of Canada to address Canada’s balance sheet recession. His recent comments continue his focus on economic policy and market expectations.