86. From Transitory to Tightening & Tariffs - Oh My! (Fed Deep Dive Pt. 2)

In Part 2 of our mini-series on “The Federal Reserve aka The Fed,” we break down how the Fed responded to inflation, why they waited so long, and how their decisions affected everything—from interest rates and mortgage costs to job markets and financial markets. This was one of the fastest rate hike cycles in history! It was the result of a tricky balancing act between fighting inflation and protecting the recovering economy. By the way, Fed Powell referred to Tariffs as transitory again recently, and this has actually happened before - that’s why the Fed chooses his words very wisely, diction is one of the FOMC’s tools in their toolbox. 

What You’ll Learn:

• What the Fed thought was happening in 2021 (spoiler: they called it “transitory”)
• How inflation kept rising—and why the Fed had to play catch-up
• What aggressive rate hikes are actually supposed to do
• And what we’ve learned (the hard way) about responding to supply-driven inflation

If you’ve been trying to understand how we got from 0% interest rates to 5.5% in under two years, this episode connects the dots. Because once you understand “the why” behind the Fed’s moves, the headlines make a lot more sense.