Larry Berman: Fastest U.S. rate hike cycle in history has its Fed's dual mandate at odds

Larry Berman on the difficulty the U.S. Federal Open Market Committee faces with the fastest rate hike cycle in history and their intended and unintended consequences.

Kashkari was highlighting the difficulty the U.S. Federal Open Market Committee (FOMC) faces with the fastest rate hike cycle in history and their intended and unintended consequences.

The rapid rate hikes caused severe stress in regional banks in March, which led to the insolvency of two large banks and the takeover of another. In order to sooth the market, the FOMC applied their so-called separation principle. Emergency lending via regulatory tools to address the financial stability while continuing to fight inflation by raising rates. It was the higher rates that caused the stress for these banks and the issues have not been resolved yet. Because of this, banks are tightening lending standards, which should cool the economy.