Federal Reserve's inaction on rates will lead to persistent inflation and higher long-term yields

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The Federal Reserve is making a mistake by not raising rates to align with the rising two-year yield, despite data suggesting otherwise. This inaction, coupled with a trending down unemployment rate since late 2025 and an unwillingness to raise rates despite ample evidence and political pressure, will likely lead to persistent inflation and a higher long end of the yield curve, indicating a revolt by bond vigilantes.