factor in determining the fate of the economy and interest rates. That’s why the Fed is walking a tightrope,” Swonk said. “Federal Reserve couldn’t have broadcast this more,” she said. “Jerome Powell said we’re going to raise rates a quarter-point on March 16. That was as blunt as you could get. They’re on for that. They don’t want it to be a surprise.” Swonk said it’s not clear what the Fed will forecast about future rate hikes. “But they have to put in the caveat that we’ll be watching financial markets carefully,” she added (2022, Domm).
“Three Steps and a Stumble Rule” is a rule of thumb stating that the prices of stocks fall significantly after the Federal Reserve raises interest rates three times in a row. The 3rd consecutive rate hike is an indication that the Fed is serious about cooling the economy and withdrawing its easy money stimulus. If the Fed raised interest rates three times this year of 2022 consecutively to tame the unruly inflation, then it will become the bursting of the housing bubble and the crashing of the stock market.
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