Why the Fed May Have to Hike Far Higher Than Expected | Henry Peabody on the Fed’s Triple Mandate and Uneven Transmission of Monetary Policy

The Fed may have to hike further than expected because private credit and AI-complex borrowers stay insulated from rate hikes while consumers absorb the pain.

• Triple mandate thesis: GMO's Henry Peabody argues the Fed has an unofficial third mandate—managing credit transmission—because private credit and fixed-rate borrowing have decoupled policy from the real economy.
• K-shaped credit: Large corporates and AI-complex borrowers keep issuing debt near-record levels (IG supply forecast up ~$200bn next quarter) while consumers face 6% mortgages and 7%+ used-car loans.

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