Will Tumult in the Housing Market Change the Fed's Trajectory?

Source: American Banker

As the Federal Reserve weighs another supersized rate increase this year, fears are mounting that the central bank's monetary actions could needlessly threaten financial stability.

Instead of hiking its benchmark interest rate by 75 basis points for a fourth consecutive Federal Open Market Committee meeting, some economists are urging the Fed to slow the rate of increases or even pause them altogether to allow the economy to absorb them. 

"The market expectations are 75 [basis points], 75 [basis points], 50 [basis points], 25 [basis points]. That is so much given where we're at," Claudia Sahm, founder of Sahm Consulting and a former Fed economist, said. "My base case is not that U.S. financial markets break, and yet, the probability of that it's rising. If they continue to be so aggressive, every 75 [basis point hike] they raise the chances of financial instabilities."