Posted on 11/30/2022 12:11:43 PM PST by Oldeconomybuyer
WASHINGTON (AP) — The Federal Reserve will push rates higher than previously expected and keep them there for an extended period, Chair Jerome Powell said Wednesday, in remarks likely intended to underscore the Fed’s single-minded focus on combating stubborn inflation.
Powell also signaled in a written speech to be delivered to the Brookings Institution that the Fed may increase its key interest rate by a smaller increment at its December meeting, only a half-point, after four straight three-quarter point hikes. But Powell also stressed that the smaller hike shouldn’t be taken as a sign the Fed will let up on its inflation fight anytime soon.
“It is likely that restoring price stability will require holding (interest rates) at a restrictive level for some time,” Powell said. “History cautions strongly against prematurely loosening policy.”
Powell acknowledged there has been some good news on the inflation front, with the cost of goods such as cars, furniture, and appliances in retreat. He also said that rents and other housing costs — which make up about a third of the consumer price index — were likely to decline next year.
But the cost of services, which includes dining out, traveling, and health care, are still rising at a fast clip and will likely be much harder to rein in, he said.
“Despite some promising developments, we have a long way to go in restoring price stability,” Powell said.
(Excerpt) Read more at apnews.com ...
Transitory depression?
Are they still shooting for a 5% unemployment rate with that?
And….the market rips.
My impression in watching Powell talk is that he doesn’t give a damn about the unemployed or the employed. He wants inflation to be 2%, come hell or high water. His focus on labor seemed to be only related to stemming increased labor costs.
That’s bad news for the employed because inflation is outpacing wage increases and Powell does not want labor cost to increase. As for the unemployed, I personally wouldn’t listen to anything Powell says about that. If you work with other people you already know the productivity of others. What percentage of them don’t really deserve a job? It’s higher than 5%. Unemployment at this point is actually a good thing for the economy. We have over employment and that means there are employees that are counterproductive. They not only don’t pull their weight, they cause inefficiencies in other’s work product.
Inflation is cured by increased productivity. The one thing nobody wants to talk about is the massive size of government. Government doesn’t make a damn thing. Government is the obstacle to productivity. Government employment need to be radically slashed to cure inflation. Cuts to government spending should be the driver of government employee cuts. That ain’t happening. Both McConnell and McCarthy are one board with an omnibus spending bill. Government spending will increase.
They’ll raise it more. They’re watching real estate, so they’ll “do the tighten up” for some time to come.
Archie Bell & The Drells - Tighten up (1968)
https://youtu.be/Wro3bqi4Eb8
As with everything else in our society, high interest rates are always bad and low is always good. There will always be the uppidity ones, even on freeper, that want to sound like the smartest people in the room by explaining how nuanced interest rates are and how very low rates are bad. Go ahead, you all are still wrong. When your opinion is framed by someone who dazzled you with their supposed knowledge and made you want to sound like them, then you need to question your position. Lower rates the better, always. The Fed has even mentioned that killing the economy and starting a recession are acceptable if it gets inflation down. Kind of like drilling a whole in your head to get rid of a headache, maybe pragmatic but still not smart.
Stupid voters vote for stupid politicians who make stupid policy.
This article is entirely wrong. The Fed announced it will raise rates by only 50 basis points instead of 75 in December and that future interest rates increases will be more modest. That’s why the stock market took off.
AP is dumber than a box of rocks.
Here’s the headline from the Wall Street Journal:
Jerome Powell Signals Fed Prepared to Slow Rate-Rise Pace in December
Here’s a link to the story:
Raising interest rates doesn’t, by itself, always cut inflation. Low interest rates didn’t cause it, so raising them won’t undo it.
But they’re not going to listen to me. I get my ideas on the economy from Milton Friedman.
I’d like to see the interest rate at 15% so I could make something on my CD’s.
Inflation was caused by the oil prices.
I guess the argument might be a monetary issue, inflation, should have a monetary solution. I am of the belief that inflation now is more monetary than having anything to do with supply issues, ect. I might be wrong. I as a Von Mises fan hate everything about central banking, and especially that Frankenstein, the Federal Reserve, created by Wall Street.
It’s a monetary, fiscal, energy, foreign, trade and regulatory policy issue. Add to that a productivity issue within the general population. Read that last one as a lack of work ethic. There is no single solution to get out of this funk. The Fed, like it or not, (I don’t) has its lane to stay in and very blunt tools to deal with inflation. They need to fix their balance sheet and raise interest rates. I don’t like the pussyfooting around with interest rates. Interest rates should have been raised one time to 10% or more to have a more immediate impact. None of this 75 or 50 basis points stuff that slowly gets interest rates to 10% or more. They are dragging out the pain. It needs to be recognized that any rate hike has little immediate impact. It takes months.
We are in for a long trip of vacillating monetary policy, just like the 1970’s. Expect the same thing from congress on the fiscal side of things. The Inflation Reduction Act starts spending us deeper into inflation in January. I expect unemployment to tick up and there will be calls for congress to do something. That, of course, involves spending money that the government does not have. If it’s not unemployment it will be some other “crisis” that requires spending.
Essentially the federal government and the Federal Reserve are not coordinating their responses to our economic problems. In fact, the government has been doing everything they can to do to undo anything the Fed does. The bright side is eventually the federal government will not be able to afford to borrow for their spending. The vast majority of our debt is short term. They presently can’t make principal payments, which means non-retired debt will be refinanced at higher interest rates. Maybe then we’ll see cuts in government. The alternative is printing more money. That will not work.
They did neither, until double-digit inflation became entrenched throughout the economy...while their cronies got rich on equities and other free-money related investments.
You are absolutely right.
I should acknowledge it’s not just the fat cats that profited from the years of low rates. My retirement fund was happy as well.
I’ve lost a lot of that back over the last couple of years. Maybe I’m breaking even, I don’t know.
He is saying he has no clue!!
Very good point and I think you might be right about how they handled interest rates. As you said by the raise here and there they are communicating that they are not all in as far as battling inflation. You are also right, besides that, there is no easy solution. I see so called Republicans want to pass a spending bill with the Democrats. The same old GOP that couldn’t get a moderate spending bill before Trump, so Trump had little choice but to sign it in. No wonder Congress is so hated by the average American.
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