Posted on 12/15/2021 11:47:37 AM PST by Oldeconomybuyer
WASHINGTON (AP) — The Federal Reserve will quicken the pace at which it’s pulling back its support for the economy as inflation surges, and it expects to raise interest rates three times next year.
In an abrupt policy shift, the Fed announced Wednesday that it will shrink its monthly bond purchases at twice the pace it previously announced, likely ending them altogether in March. The accelerated timetable puts the Fed on a path to start raising rates in the first half of next year.
The Fed’s new forecast that it will raise its benchmark short-term rate three times next year is up from just one rate hike it had projected in September. The Fed’s key rate, now pinned near zero, influences many consumer and business loans, including for mortgages, credit cards and auto loans.
(Excerpt) Read more at apnews.com ...
All to keep in flow of money into the stock markets and perpetuate the belief that what happens in the stock markets is an indicator of the country’s economy.
An awful lot of significant long term policy actions for some transient inflation.
They don't have the guts to take action that will kill the stock market in an election year. (maybe 1 hike after Nov.)
They really have no good options.
I have no prediction about which way they will end up going, but all choices are bad now.
If inflation remains this high, don’t you think they won’t have a choice? At 6-9% a year (based on their metrics) the Dems are going to get blown out anyway...
> ZERO rate hikes in 2022. <
Rate hikes will damage the stock market, and make it more difficult for Congress to borrow and spend. So, yeah. You just might be right.
The Fed painted themself into a corner. Congress and Brendon are helicoptering cash into the economy like rain, energy/food, and wholesale prices off the charts.
Three hikes in 2022 won’t help.
Not sure they can before the mid terms.
“The Fed’s key rate, now pinned near zero”
And so if they raise it three times by half a percent each time the fed rate will hover near 1.5 to 2%? Meh.
Money is far too cheap right now and has been for years.
Saw that most houses are out of reach to those making 100K a year? What? At 2%? $2,000 a month borrows $300K. What kind of house does one need?
Say what?
More likely they'll increase them by a quarter point at a time.
The "choices" you present assumes rationality that is unfamiliar to power hungry Marxists.
They can lie about inflation, but not the DJI.
The only way they stopped Carter era inflation was getting the Fed rates to more than 13%!
They tried tinkering with a quarter point raise here and there for years—didn’t work—finally had to just bite the bullet.
Those who fail to learn from history must repeat it....
Here is a chart with the history:
https://fred.stlouisfed.org/series/INTDSRUSM193N
We all assume that the Fed Chair will accommodate the president & his agenda. They will in normal times. But we are not in normal times with inflation running in the 7 - 9% range. The Fed will tighten and consequently Biden’s presidency will be over. This happened to Jimmy Carter when Paul Volcker went rogue.
Facing that inflation isn’t transitory.
They don’t dare raise rates enough to really make a difference.
I see that precisely as the most likely scenario — raise rates just enough to cause some damage but not enough to actually make a difference and fix anything. Worst of all paths.
My prediction, they will tinker, tinker, tinker, tinker...
and then panic.
The median home price in the US is now $375k. And in many desirable red state markets, prices are going nuts. In Sarasota, houses that sold for $250K a couple of years ago are now often fetching $400K or more.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.