HIKE HARM

Domestically generated inflation due to an overheated economy warrants rate hikes. But with the labor market weak enough that wage growth is declining and is now less than inflation, and with house prices barely rising, a hike is a mistake. Inflation pressures are being driven by three largely temporary exogenous supply shocks: tariffs, war (energy/food), and the AI buildout, and none of those pressures will lessen with rate hikes.