I understand why increasing interest rates can negatively affect the economy, but why would the Feds raise the rate because of the positive jobs report?
I always assumed that more people employed means more discretionary spending leading to more corporate profits.
In: 7
If the economy is doing too well, it causes inflation.
The Fed raises rates to cool inflation.
If Jobs reports show good numbers, it means the economy is not cooling fast enough.
(A side note: inflation is already cooling, but it takes time for rate increases to actually have the effect they want. The Fed is looking in the rear view mirror with lagging data like Shelter for example, so they arent thinking in present day terms. I dont think they will be happy until they cause a recession).
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