A major Wall Street firm is ranking financial instability over inflation as the biggest economic risk for the next three months.
In an interview following the Federal Reserve’s quarter point interest rate hike, Wells Fargo Securities’ Michael Schumacher suggested policymakers are underestimating how quickly tightening credit conditions could hurt the economy.
“The Fed is not really giving enough credence to the idea that tighter credit means things weaken in a fairly quick manner,” the firm’s head of macro strategy told CNBC’s “Fast Money” on Wednesday.
He estimates it will take a month or two to get clarity on credit conditions.
“It’s hard to say right now whether the Fed has tightened enough or too much,” said Schumacher. “That’s why the market has been bouncing around so much —whether…
