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US Federal Reserve raises interest rates for first time since 2018

theguardian.com

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Re: US Federal Reserve raises interest rates for first time since 2018

#11

Post by nine_zeros »

frockington1 wrote: post #4

They did the absolute minimum to appear to be able to say they are dong something. With official inflation nearing 8%, this is nowhere near enough. SO far equity markets agree this is effectively nothing

They need to go slow. An abrupt rate increase will cause a recession.

Re: US Federal Reserve raises interest rates for first time since 2018

#12

Post by czbond »

standardUser wrote: post #9
frockington1 wrote: post #4

They did the absolute minimum to appear to be able to say they are dong something. With official inflation nearing 8%, this is nowhere near enough. SO far equity markets agree this is effectively nothing

The Fed said to expect up to 7 increases this year.

And no one believes them. The bond market is doing the rate cuts for them.

Re: US Federal Reserve raises interest rates for first time since 2018

#13

Post by miketery »

whoseonthat wrote: post #7
nickff wrote: post #2

It's worth taking a look at the effective federal funds rate over time, which clearly shows how low it's been recently: https://www.macrotrends.net/2015/fed-funds-rate-historical-c...

It seems interest rates lower during recessions. Right now we are already low and are raising which seems to be a different pattern. Is lowering interest rates a method to overcome a recession?

Lowering interest rate to stimulate economy, increasing interest rate to lower inflation. Problem is we've got no room left to lower and asset prices have never been higher.

Re: US Federal Reserve raises interest rates for first time since 2018

#14

Post by downrightmike »

whoseonthat wrote: post #7
nickff wrote: post #2

It's worth taking a look at the effective federal funds rate over time, which clearly shows how low it's been recently: https://www.macrotrends.net/2015/fed-funds-rate-historical-c...

It seems interest rates lower during recessions. Right now we are already low and are raising which seems to be a different pattern. Is lowering interest rates a method to overcome a recession?

Yes, because it increases the money supply. We are supposed to tighten when things are good by raising rates. At this point they need to raise rates to pull money out of the system. Because with covid, not only did we cut rates, we put in a HUGE amount of money and that was really irresponsible. And now we are seeing the repercussions with inflation lowering the value of the dollar.

Re: US Federal Reserve raises interest rates for first time since 2018

#15

Post by userabchn »

whoseonthat wrote: post #7
nickff wrote: post #2

It's worth taking a look at the effective federal funds rate over time, which clearly shows how low it's been recently: https://www.macrotrends.net/2015/fed-funds-rate-historical-c...

It seems interest rates lower during recessions. Right now we are already low and are raising which seems to be a different pattern. Is lowering interest rates a method to overcome a recession?

It encourages investment (over saving), so can help to boost the economy

Re: US Federal Reserve raises interest rates for first time since 2018

#17

Post by avrionov »

Not only that they increased the rate, but also they'll reduce the buying of securities:

"In addition, the Committee expects to begin reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities at a coming meeting."

Which may have a bigger effect.

Re: US Federal Reserve raises interest rates for first time since 2018

#18

Post by hgomersall »

frockington1 wrote: post #4

They did the absolute minimum to appear to be able to say they are dong something. With official inflation nearing 8%, this is nowhere near enough. SO far equity markets agree this is effectively nothing

It's only nowhere near enough if you view the process as something other than a huge charade. Take a look at the predicted inflation to see how little the monetary policy "experts" have a clue.

Re: US Federal Reserve raises interest rates for first time since 2018

#19

Post by hedora »

whoseonthat wrote: post #7
nickff wrote: post #2

It's worth taking a look at the effective federal funds rate over time, which clearly shows how low it's been recently: https://www.macrotrends.net/2015/fed-funds-rate-historical-c...

It seems interest rates lower during recessions. Right now we are already low and are raising which seems to be a different pattern. Is lowering interest rates a method to overcome a recession?

Welcome to stagflation.

Re: US Federal Reserve raises interest rates for first time since 2018

#20

Post by nickff »

whoseonthat wrote: post #7
nickff wrote: post #2

It's worth taking a look at the effective federal funds rate over time, which clearly shows how low it's been recently: https://www.macrotrends.net/2015/fed-funds-rate-historical-c...

It seems interest rates lower during recessions. Right now we are already low and are raising which seems to be a different pattern. Is lowering interest rates a method to overcome a recession?

Yes, the common theory is that lowering interest rates encourages investment and growth, at the cost of higher inflation. This increased inflation is also generally thought to depress 'real' salaries, which further increases growth.

https://www.investopedia.com/ask/answers/12/inflation-intere...

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