Wishful thinking ignores unprecedented tightening

Fed chair Jerome Powell is willing to risk recession. (Image: Getty)

Mon, 06 Feb 2023

Financial markets are behaving as if investors are convinced we’re in for a soft landing, but I’m afraid this is a dangerous case of wishful thinking.Our benchmark S&P/NZX 50 index has gained 6.3% year-to-date while the US S&P 500 index had gained 7.4% and the tech-heavy Nasdaq 14.7% as of our Friday.Is this rational when both our Reserve Bank and the US Federal Reserve are still hiking interest rates?Why would you believe in a soft landing when central banks have never tightened so much so quickly before?Our central bank ha...

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