Interest Rate Hikes: After This Week, Enough Is Enough

AP seems to think that the consensus is that the Federal Reserve will raise interest rates another quarter point this week.

This MarketWatch piece (requires registration) begs to differ, claiming that analysts have no idea what the Fed will do.

In a rambling post, Larry Kudlow hopes that if there is a quarter-point hike, that’s the end of it.

Steve Forbes (requires subscription; see second topic of article) thinks that rate hikes aren’t the prescription:

Last month the U.S. Federal Reserve once again raised short-term interest rates and indicated that even more hikes may be on the way. Yet inflation–low by 1970s standards–persists, like a cold that won’t go away. Commodity prices, most notably oil, are still high. Gold, the best barometer of monetary disturbance, remains well above $400 an ounce, signaling that inflation will stay with us.

Jacking up the nominal cost of money is not the way to douse inflation–in the late 1970s and early 1980s interest and inflation rates were both in double digits. Removing excess money is the solution. The process is simple: The Federal Reserve’s open market desk should sell bonds from the Fed’s portfolio, thereby removing cash from the banking system and the economy. When gold dips below $400 an ounce, stop the process.

I think any further hikes beyond the one that may happen this week fights a core inflation (excluding food and energy) monster that probably isn’t there (or is in hiding), and poses a real danger to on-the-edge homeowners and others with variable-rate loans. Raising Uncle Sam’s cost of borrowing doesn’t help things either.
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UDPATE: The rate hike happened, with indications of more to come. Given the media-driven drop in the Consumer Confidence Survey, that should be the end of it, Mr. Greenspan.