Posted on 12/31/2018 9:28:01 AM PST by texas booster
... The FOMC raised the fed funds rate a quarter point to 2.5 percent on December 19, 2018.
Prior to that, the Fed had raised rates to the following levels:
0.5 percent on Dec. 15, 2015.
0.75 percent on Dec. 14, 2016.
1.0 percent on March 5, 2017.
1.25 percent on June 14, 2017.
1.5 percent on Dec. 13, 2017.
1.75 percent on March 21, 2018.
2.0 percent on June 13, 2018.
2.25 percent on September 26, 2018.
The Fed finished tapering off its quantitative easing program in 2013. That was a massive expansion of the Fed's open market operations tool. The Fed still had $4 trillion of debt in 2017 on its books from QE. In October 2017, it began allowing its holdings to gradually decline.
Historical FED rates:
The Fed lowered the rate by a half point, to 0.25 percent, on December 16, 2008. That was the 10th rate cut in a little over a year. Previous cuts included:
Sep. 18, 2007: A 1/2 point cut to 4.75 percent.
Oct. 31, 2007: A 1/4 point cut to 4.5 percent.
Dec. 11, 2007: A 1/4 point cut to 4.25 percent.
Jan. 22, 2008: A 3/4 point cut to 3.5 percent.
Jan. 30, 2008: A 1/2 point cut to 3 percent.
March 18, 2008: A 3/4 point cut to 2.25 percent.
April 30, 2008: A 1/4 point cut to 2 percent.
Oct. 8, 2008: A 1/2 point cut to 1.5 percent.
Oct. 29, 2008: A 1/2 point cut to 1 percent.
The Fed's aggressive expansionary monetary policy was needed to address the 2008 financial crisis.
(Excerpt) Read more at thebalance.com ...
Typical of most NYC websites, they simply can't figure out what could have changed in late 2016 that would have caused the sudden rise of interest rates as compared to the previous 8 years. However it was nice of them to list the fall and rise of interest rates over the last 10 years.
From the article:
The current federal funds rate rose to 2.5 percent when the Federal Open Market Committee met on December 19, 2018. This benchmark rate is an indicator of the economy's health.
The Federal Reserve signaled it would raise rates to 3 percent in 2019. The rate is critical in determining the U.S. economic outlook.
The 2008 recession caused the Fed to lower its benchmark rate to 0.25 percent. That’s effectively zero. It stayed there seven years until December 2015, when the Fed raised interest rates to 0.5 percent. The fed funds rate controls short-term interest rates. These include banks' prime rate, most adjustable-rate and interest-only loans, and credit card rates.
The deep state knows they can get away with this stuff because there is no opposition party.
The fact that Trump never says, but should say everyday... The Fed supported Obama throughout his entire presidency and the economy was at the highest point, OK. Trump rocks the economy and the Fed responds by raising rates and selling bonds. So, the Fed clearly thinks that Trump is on the right path and Obama needed all the help that they could muster.
Higher interest rates are good for savers, good for the dollar, and good for oil prices.
Don’t borrow what you can’t afford to pay back.
Chart with FED rates from 1971 through 2018:
https://www.thebalance.com/fed-funds-rate-history-highs-lows-3306135
Worst years: 1979 [15.5%], 1980 [20%], 1981 [20%], 1982 [15%]
Do you think there is any chance an independent candidate could run and win outside the current two party dialectic process? It seems the majority close their eyes and vote straight ticket “all the way down”.
> Higher interest rates are good for savers... <
Yep. Back when the Fed was lowering rates, some people were complaining about that. This was hurting seniors, they said, because many seniors depend on CD interest. Why doesn’t the Fed care about seniors?
I guess it all depends on whose ox is being gored.
Not likely. The Democrat Party has solidified in the far left but the Republican Party is splintered. As such the R's are not able to mount a unified defense against the left so, incrementally, the left is overpowering them.
The government should not have the power to determine interest rates in the first place. The Fed, at least, is aiming to get them back to market levels.
It was the artificially-low, governmentally-determined rates that caused the over-blown stock market. It's about time that came down to earth, too.
The higher rates will cause pain in the national budget (and I use that term loosely), but that is a function of the ridiculous spending of the last 14 years.
Not if they're accompanied by even higher inflation.
The US has low inflation, high employment, and a strong consumer driven economy. Higher rates keep a lid on debt and underpin a strong national currency. What's not to like?
I'm not opposed on principle and think the Fed is pretty much on the right track given what they had to work with.
I will say one downside is a lot more tax dollars going to government debt service.
The FED did exactly what they had announced WELL in advance that they were going to do. People overreact to nearly everything and since people make the decisions that send the market where it ultimately goes, the market overreacts to everything. The market got TOO bullish because the people trading it got too bullish. The temptation to squeeze shorts was just too good to pass up once the market became overextended. The market had to pay the price for its excess. Then, like a bunch of crying babies, the participants started whining for the FED to extend it an olive branch. The FED’s mandate is NOT to support the stock market. The FED did what it had announced it would do. A few years ago, the market started whining about FED surprises. The FED responded with a greater amount of transparency and started telegraphing its moves. The funny part of all this is the notion that higher interest rates are destined to kill the market. Historically, we are not even close to prohibitively high interest rates. And the market has a history of RISING (regardless of exceptions) with rising interest rates because the demand for money increases as the economy strengthens. The players got spoiled by rates at of near ZERO for so long they forgot what normal rates even look like. Once a lot of states and local governments start going belly up because the historically low interest rates killed their pension assumptions, you will figure out one of the reasons why the FED did this.
You are correct that the Fed had made the announcement way in advance. In the past, that was enough to provide some slack to lessen the gyrations.
With today's anti-Trump hysteria and the Dem gamesmanship on everything, all it did was to give politicians and the media something to bloviate about.
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