Posted on 05/04/2022 1:05:07 PM PDT by EBH
The Federal Reserve on Wednesday raised short-term interest rates by 0.50%, as part of an effort to tamp down the inflationary pressures weighing on Americans.
The central bank suggested that it will further raise borrowing costs throughout this year as it attempts to undo its pandemic-era, easy money policies. The policy-setting Federal Open Market Committee also detailed plans on unwinding its nearly $9 trillion balance sheet.
The decision to raise rates by 0.50% marked the most aggressive increase made in a single meeting since May 2000. Over the last two decades, the Fed has opted to raise interest rates only in increments of 0.25%, with the latest move underscoring the severity that inflation poses at the moment.
“The Committee is highly attentive to inflation risks,” the FOMC said in its updated policy statement.
The Fed is now targeting interest rates in a range between 0.75% and 1.00%, with some Fed officials advocating for raising the target closer to 2.5% by the end of the year.
Fed hikes bleed through the economy in the form of higher interest rates on credit products like credit cards, mortgages, and business loans.
(Excerpt) Read more at finance.yahoo.com ...
How are bonds doing?
Not sure why DOW is up 932, other than a possible Dead Cat Bounce.
The stock market is pretty fake at this point.
DOW is up 932 points because the bright boys think this means the fed is serious about inflation. They are wrong. M2 will not be affected by interest hike. As soon as reality sinks in, there will be massive profit taking and probably by Friday’s close this gain will all be gone and then some. IMHO.
Black eyes. Just like some of the children born after the jab. Maybe someone can post the pics. I can’t with this phone.
And the walls came tumblin’ down....
I’m wondering where these hikes will lead.
The rate hike was expected and already factored in.
My concern is we have negative GDP and they are raising rates. It sounds counter-intuitive and recessionary.
Wall Street is happy there was not a .75% rate hike.
Hyperinflation?
One number to watch—the ratio of government interest payments on the national debt to total tax revenues.
Today that number is 15%.
The rate hikes today will probably kick it up to 20%.
If the interest rate goes to 10% then the ratio hits 100%—all tax revenue goes to pay interest on the national debt.
That is doom territory—no way out—the more you borrow the more insolvent you become—a financial black hole...
My concern is we have negative GDP and they are raising rates. It sounds counter-intuitive and recessionary.
—
We’ve got all that, and double-digit inflation. It’s inflation, wrapped in a recession, and covered with supply chain disruption. It’s an economic turducken.
I think this is only going to make things worse
Hope I’m wrong
The rates needed to come up, the issue is the timing. And with negative GDP could cause the recession to hit.
Second reading further down they are talking about “quantitative tightening” of the balance sheet.
We know the Fed is in a real pickle and there is no easy way of doing this. Just hoping they do not crash things...
One of my major concerns
Thanks for elucidating
Raising the short-term interest rates is a sure ticket to expanding the already burgeoning recession, a painful period that has to be endured before we come out the other side.
Fasten your seat belts, this is going to be a bumpy ride. Jimmy Carter redux.
From the comment section:
Will this move reduce energy price? No. Will it reduce food price? No. Since the inflation was not due to economic expansion (we just had a -1.4% GDP growth, will this move cause a severe recession? You bet.
Biden’s getting the job done as he intended.
The exact synopsis of fractional-reserve-bankstering, Jekyll Island creation of the FED, and increasingly worthless fiat.
The FED was doomed from the start. Only question is why did it take 100 years for its imminent demise. Oh well, the longer it held out, the harder it will fall.
The tightening should have been done decades ago. It’s a non-starter now.
They waited two or three years to raise rates.
I’m trying to think of a time similar to this where debt was out of control and people didn’t produce/work and got freebies. The fall of the Roman Empire is all that comes to mind.
They have been stealing our wealth for two decades by setting interest rates ridiculously low - far less than even the pitifully low government manipulated fake inflation rates.
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.