Fed Hikes Interest Rates for First Time Since 2018

[mystery-ak]

Fed Hikes Interest Rates for First Time Since 2018

John Carney 16 Mar 2022

The Federal Reserve raised its benchmark interest rate target to a range of 0.25 to 0.50 percent on Wednesday, the first hike since 2018.

The move was widely expected after several Fed officials indicated that the Fed would hike its target at the conclusion of the March meeting at the Federal Open Market Committee.

“Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures,” the FOMC said in a statement.

Projections released by the Fed on Monday showed that Fed officials expect to raise rates by a quarter of a point at each of the Fed’s six remaining meetings this year, bringing the target to around 1.9 percent. That is up a full percentage point from the projections released in December.

The march projections also show officials expect inflation to be running at 4.3 percent by the end of the year, up from 2.6 percent expected in December. Core inflation, which excludes food and energy prices, is expected to rise 4.1 percent, up from 2.7 percent expected at the end of last year.

more
https://www.breitbart.com/economy/2022/03/16/fed-raises-rate-target-to-fight-inflation/

[Cyber Liberty]

With inflation raging at these levels, I don't see how upping the rate by 0.25% is going to do much.  Wall Street is celebrating far too much about this.

[libertybele]

With inflation raging at these levels, I don't see how upping the rate by 0.25% is going to do much.  Wall Street is celebrating far too much about this.

Especially since it's been reported that they have plans for further rate hikes in the near future.

https://www.marketwatch.com/story/fed-raises-rates-and-plots-strategy-of-steady-further-increases-11647453994?mod=home-page

[Cyber Liberty]

Especially since it's been reported that they have plans for further rate hikes in the near future.

https://www.marketwatch.com/story/fed-raises-rates-and-plots-strategy-of-steady-further-increases-11647453994?mod=home-page

That much is certain.  I understand their caution, with a recession breathing down our necks.  For them to say the rate is going to be increased into the future is to "bake it into the cake" (I.E. being predictable), hopefully not causing a 1929-style market crash.

[DefiantMassRINO]

Starting a recession is not going to make things better.

Higher rates do not fix:

- bad domestic energy policy
- disruptions, dislocations, and insufficient diversities of the supply chains
- Covid-19/SARS2 surges
- bird-flu being found in flocks of poultry
- insufficient affordable housing in some cities
- geo-political instability
- labor force participation and skills deficits
- decrease healthcare and colege tuition inflation

Higher rates are intended to reduce demand and consumption to bring supply and demand back into balance.

But, what are they doing to resolve issues on the supply side?
- are they allowing investment to increase domestic energy supply and to improve distribution?
- use Federal procurement process to encourage a more diverse, stable, and secure supply chain?
- are they going to improve Covid-19/SARS2 surveillance, testing, and surge capacities?
- how are they going to overcome and override NIMBY limousine liberal resistance to constructing more housing in high demand markets?
- how are they going to project economic, military, and political strength to increase stability?
- how are they going to fill the skills gap that contributes to some labor shortages?
- enact measures to improve healthcare and education competition to drive down costs?

Recession doesn't help the unemployed, underemployed, the underhoused, the homeless, the disabled, and the retired.

[roamer_1]

With inflation raging at these levels, I don't see how upping the rate by 0.25% is going to do much.  Wall Street is celebrating far too much about this.

Especially since interest rates have been kept artificially low for a decade or more. This is a HUGE bubble getting ready to pop. And it ain't gonna be pretty.

[DefiantMassRINO]

Another thing raising rates can do to decrease inflation is to start a deflationary death spiral fueled by non-performing, insolvent loans and seizure of credit markets.  That will shrink the money supply, ala 2008.

[Cyber Liberty]

Especially since interest rates have been kept artificially low for a decade or more. This is a HUGE bubble getting ready to pop. And it ain't gonna be pretty.

You are correct, Sir!  We'll be lucky if we get away with a mere Recession this time.  This is the one area with which I am not happy with Donald Trump's part of it.

[Cyber Liberty]

Another thing raising rates can do to decrease inflation is to start a deflationary death spiral fueled by non-performing, insolvent loans and seizure of credit markets.  That will shrink the money supply, ala 2008.

..and 1986.

[libertybele]

That much is certain.  I understand their caution, with a recession breathing down our necks.  For them to say the rate is going to be increased into the future is to "bake it into the cake" (I.E. being predictable), hopefully not causing a 1929-style market crash.

I fear Russian and China getting together and working towards devaluing the dollar. I'm not aware of anything Trump did to cause the economic woes that we are seeing now -- I think debt was relative to combating COVID.

War has sometimes been seen as a way out of our economic woes, and I think as demented as he is, Joe would see things in his WW II mindset.

I think we will see things worse than the Great Depression.  We've always prepared, but I see things we could have, should have done.   

[roamer_1]

You are correct, Sir!  We'll be lucky if we get away with a mere Recession this time.  This is the one area with which I am not happy with Donald Trump's part of it.

To be fair, Tumpy is just the latest... This goes back hard on the Republican side all the way to Dubya... One could even try to blame Reagan.

It's a neat trick. Drop a little cash in the bottom, Drop corporate rates at the top, keep interest low, and kaboom! Instant and massive market revving, like hitting the NOS on a hot rod.

The problem with NOS is, a little dab will do ya. Only in the dire straits. And then you shut it back off - Because if you let it go all out, you will lunch your motor, sure enough.

They've left it balls out for way, way too long. Sooner or later the money has to be paid back. The interest rate realigned. That's the part they never wind up getting to.

Reagan jacked it up - Gave us a remarkable economy that went twenty years. 94 Congress tried to line the timing marks back up... And then Dubya jacked it up again, And it's been wide open ever since.

The writing is on the wall.

[Kamaji]

Starting a recession is not going to make things better.

Higher rates do not fix:

- bad domestic energy policy
- disruptions, dislocations, and insufficient diversities of the supply chains
- Covid-19/SARS2 surges
- bird-flu being found in flocks of poultry
- insufficient affordable housing in some cities
- geo-political instability
- labor force participation and skills deficits
- decrease healthcare and colege tuition inflation

Higher rates are intended to reduce demand and consumption to bring supply and demand back into balance.

But, what are they doing to resolve issues on the supply side?
- are they allowing investment to increase domestic energy supply and to improve distribution?
- use Federal procurement process to encourage a more diverse, stable, and secure supply chain?
- are they going to improve Covid-19/SARS2 surveillance, testing, and surge capacities?
- how are they going to overcome and override NIMBY limousine liberal resistance to constructing more housing in high demand markets?
- how are they going to project economic, military, and political strength to increase stability?
- how are they going to fill the skills gap that contributes to some labor shortages?
- enact measures to improve healthcare and education competition to drive down costs?

Recession doesn't help the unemployed, underemployed, the underhoused, the homeless, the disabled, and the retired.

Exactly.  Without addressing those issues, we are setting ourselves up for stagflation.