Posted on 10/08/2022 9:12:46 PM PDT by MinorityRepublican
Some economists fear the Federal Reserve—humbled after waiting too long to withdraw its support of a booming economy last year—is risking another blunder by potentially raising interest rates too much to combat high inflation.
The Fed has lifted rates by 0.75 percentage point at each of its past three meetings, bringing its benchmark federal-funds rate to a range between 3% and 3.25% last month—the fastest pace of increases since the 1980s. Officials have indicated they could make a fourth increase of 0.75 point at their Nov. 1-2 meeting and raise the rate above 4.5% early next year.
Fed Chairman Jerome Powell has said the central bank isn’t trying to cause a recession, but it can’t fail in its effort to bring down inflation. “I wish there was a painless way to do that. There isn’t,” he said last month.
Still, several analysts worry the Fed is on track to raise rates higher than required, potentially triggering a deeper-than-necessary downturn.
“They’ve done a tremendous amount of tightening,” said Greg Mankiw, a Harvard University economist who advised President George W. Bush. “Recessions are painful for a lot of people. I think Powell’s right that some pain is probably inevitable…but you don’t want to cause more than is necessary.”
Until June, officials hadn’t lifted rates by 0.75 point, or 75 basis points, since 1994. Instead, they usually preferred making smaller quarter-point increases that gave them more time to see their economic effects.
“I would slowly ease the foot off the brake,” Mr. Mankiw said. “That means probably for a given meeting, if they’re debating 50 or 75, go with 50 instead of 75.”
Former Fed Vice Chairman Donald Kohn agrees it is near time for Fed officials to slow their rate increases.
(Excerpt) Read more at wsj.com ...
The Fed is forced to destroy the economy in order to save it.
Booming economy? I missed that part.
It's called stagflation. A repeat of Carter years.
Buy-Dung is making Carter great again.
Historically, the typical ‘prime’ interest rate has been around 5 to 6%.
It was artificially reduced in the mid-2000s to historic lows.
Now, a return to historically typical rates is going to bite those who have benefited from the near-zero rates.
Retirees who had hoped to have an interest income in their retirement are getting some returns. The trouble is, those returns are still well below the rates of inflation on food, housing and fuel.
The part where you party on $30T of printed and borrowed money spent buying stuff that you don't even have to bother troubling to produce yourself.
The part where BRICS and now apparently OPEC have decided that maybe dollars should not be the worlds reserve currency any more. The part where the drunk got told to find his own booze and stop borrowing from the community hootch locker.
Well Duh!
The Fed has two tools to fight inflation:
1. Interest Rates
2. Pulling cash out of the market.
Both tools dampen demand.
Right. The same people who screamed for years that the FED was keeping rates ridiculously low are now screaming the opposite.
It’s not the FED’s fault that idiot Biden needlessly and recklessly inflated the cost of oil, which is used in the production of thousands of everyday items. Close to 30% of all oil use is non-fuel in nature.
TIMBERRRR...!
Insanity
Wall Street doesn’t care about Main Street. Inflation is the cruelest tax of all. The Fed has artificially kept interest rates low. Cheap money printed by the Fed has helped create debt, personal and governmental. There is no easy way out.
These fed ass holes don’t know what they ate doing. Laying people of to make the economy work better? WTF?? I have a list of people who should be out of work and all these idiot’s names are on it twice!
Congress could just stop spending and cancel the trillions in the new spending these past several months.
$4.6 Trillion!!
ping jockey wrote:
“
Ya think. DUMBASSES. Took what should have been a rip roaring economy and committed themselves to every single issue DESIGNED TO DESTROY it and for what. I hope every last one of those f*****s starves to death and their families have a reserved seat in the soup kitchen. For me, I’ve got 18 months of survival foods and at least one good growing season so I will likely meet you there in 36 months. FOAD
“
Fat cats and deep staters need to be unemployed and experience what folks went through in the big aerospace layoffs.
BRICs and everyone else are buying dollars like crazy. If you haven’t noticed, this has been one of the best years for the dollar in history. I write this as I am in Paris buying euros below parity for the first time.
[a Harvard University economist who advised President George W. Bush]
Great. 2008 was just wonderful.
Replicans should be aggressively pursuing supply growth policies to counteract the Fed’s rise in interest rates. End the war on fossil fuels and nuclear. Stop forcing banks to lend to politically favored groups. End Marxist tax policies that impede growth. Growth policies like these worked during the Reagan administration while the Fed of that era was simultaneously reducing inflation.
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