The Fed has to raise rates. If they don't raise them, then people can continue to borrow at deeply negative real rates and inflation will only accelerate. Right now the market expects that Fed policy will be effective in breaking inflation without even taking real rates positive... an assumption likely to be challenged.
THE FED buying those bonds kept rates down. If they hadn't, market forces would have taken over years ago to force The FED to raise sooner. No free lunch.
It's not just the Fed. Kuroda's yield curve control, the RBA pumping AUS RE with ultra low rates, even with >50% of mortgages on floating... Canada's central bank and Trudeau pumping RE in Toronto to some pretty ridiculous levels. Honestly, it's criminal that the Fed didn't change policy after the covid selloff crushed rates on tens and the long bond. Wall street seized on the opportunity to leverage RE, finance corp buybacks, push M&A, and refinance everyone at once in a lifetime rates. Rates so low, buyers and hedge funds were willing to pay any price, 50k over asking 100k over asking... The Fed was there to buy the MBS, and finance all the Repub and liberal spending, all the bullshit in the CARES act, omg it's bad, the PPP loans and then forgave them... Its pretty bad. A lot of it deserves to fail. Powell had the 2year yielding 0.25% which is almost as bad as Kuroda. What's the implied 10 year rate on that?
Yes, hence STOP BUYING BONDS FED. That is all that needs to be done is my point. Don't raise rates to such a degree that you cripple the economy because crippling the economy will mean depression which will mean everyone poor which will mean nobody can afford things which will mean prices must come down. That is literally what many news articles are saying they are doing or that needs to be done. That is insane is what I am saying.
The price increases of oil/gas is not due to Biden policies. First oil production under Biden either equals or exceeds 3 of the 4 years under Trump - https://www.politifact.com/factchec...s/oil-production-bidens-first-year-par-trump/ Second, even if US oil companies pumped more oil they are not going to sell it in the USA for less than they can sell it in Europe/Asia, who desperately need it now that Russia production is down. Witness Canada that is a huge net exporter of both oil and gas; gasoline prices in Canada have increased 250% since 2020.
You're late to the party. The FED stopped months ago. They are getting rid of what they have on expiration.
I like your a,nalysis. I have a slightly different take though. I see fiscal policy fighting Fed monetary policy. Because of that, it seems likely a funds rates above 5% will ultimately be needed to bring inflation below 5% and I fully expect the Fed to go on until they induce a recession and unemployment. I don't see a return to the old 2% target, barring a deep recession. It will have to remain higher than 2% for long time. There are alternatives that should be attempted, but it would take forward thinking and action from the administration and Congress. The Fed is doing what they know how to do.
The Fed's goal is transferring as much wealth as they can to the richest 1% at the expense of the other 99%, at this they have a stellar track record. The Fed creates larger & larger bubbles & more lies - they are the drunken clowns spiking the punch bowel moonshine, crack, & heroin.
They are also responsible for Global Warming! Then just when we start suspecting them, they cool things for a while to throw us off the track. Then they turn up the temperature again and melt some more icebergs.