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nigelthornberrynose t1_jcbppua wrote

Reply to comment by ttyp00 in Credit Suisse sinks 21% after top shareholder rules out support by fastclickertoggle

Probably not this time actually. Mortgage rates largely follow the Fed rate and the Fed has precisely two goals (the “dual mandate”):

  1. Keep inflation about 2%.

  2. Keep unemployment about 4%.

That’s it. There’s nothing in the Fed mandate about protecting banks. Inflation is still at 6% yoy (yes that’s down from about 9% yoy a few months ago, but still too high) meanwhile unemployment is still very low at less than 4%. Thinking that the Fed will abandon its goal of price stability (aka 2% inflation) by suddenly cutting interest rates in order to save banks would be a very strange move. IF we see a massive unemployment spike as a result of bank failures then they would have a reason to cut rates. Until then, cooling inflation is a very high priority issue for both ordinary people and politicians so I don’t see a drastic rate cut before an even more painful unemployment report comes out.

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DickJohnsonPI t1_jcbx58g wrote

Is it true that there are problems with the way unemployment numbers have been presented, and that 2022 employment gains were counted in 2023 figures?

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nigelthornberrynose t1_jcc1o22 wrote

There is always debate about how both inflation and unemployment are calculated. People argue the reported numbers are wrong all the time, they have done for as long as I’ve been reading financial news, and probably some of those people are right. Sometimes unemployment numbers are retroactively revised after more information becomes available, that certainly has happened before.

But in terms of predicting monetary policy I’m not sure it matters. What matters is if the numbers the Fed has are above or below their target, not whether the numbers are 100% accurate, as far as their accuracy can even be measured.

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