Since Jerome wants to think he's channelling Paul Adolph Volker (he was born in 1927 before that middle name became verboten), I thought that I would post a few charts from tradingeconomics.com stretching way back to Volker's day in the FED hot seat. Given the current 9.1% inflation rate, the current 2 year note at 3.15% is a joke, a bad joke without a punchline. To channel Volker that 2 year note needs to be a lot higher. How high? Well if you're a real ring tailed tom optimist and believe inflation will fall by half over the next year or so just due to demand destruction and magical supply chain self-repair, then the 2 year note yield still needs to double to provide a real yield and reduce that "low" level of inflation.
The nervous chatter today on CNBC that Jerome might be contemplating a 1% bump in late July is missing the point that he needs a 1% bump every month for the rest of this year to force the 2 year note to provide a real yield if you believe 9.1% inflation. And the dollar, well the greenback should have its day in the sun if rates do head any where near that far north.
Do I think the above is going to happen in an election year? Not a chance. Ask Jimmy Carter, the peanut farmer turned president, he's 97 and still around somewhere in Georgia I assume, what happens to a president's party when a Volker type inflation attack is begun.