Quote:
Originally Posted by opendoor
I don't think rates alone will cause a huge issue, though they could very well have to go well above a 2-3% increase to get inflation under control. It's hard to see how a 3% Fed/BoC rate is going to combat 7-8% inflation if it gets entrenched.
The bigger issues will be job losses during a recession and people potentially being underwater when housing prices likely drop. That could lead to a pretty ugly combination.
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I see this inflation as still being heavily driven by supply chain, productivity, and global conflict. Those are solvable problems independent of interest rates.
I agree with you that recession leading to job loss is a threat on the housing market.
Ideally instead of interest rates you could just increase taxation and repay debt to combat inflation. That way the wealth just doesn’t go to capitalists.