Central Banks Will Prioritize Government Spending Over Inflation In 2025

By Daniel Lacalle – dlacalle.com

The Federal Reserve panicked in June 2024 and decided to delay the normalization of its balance sheet, coinciding with a period of massive deficit spending and Treasury debt issuance at elevated rates.

The Federal Reserve proceeded to implement an unnecessary 50 basis point rate cut during a period when financial conditions were at their loosest in years, growth was allegedly robust, and employment was solid, according to the Fed, but inflation remained above target.