what does this mean/imply: > In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities
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Federal Reserve to increase interest rates by 75 basis points
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Re: Federal Reserve to increase interest rates by 75 basis points
#12Is 75 basis points correct? The actual press release appears to describe an increase from 2-1/4 percent to 2-1/2 percent, which is only 25 basis points. It says it "anticipates that ongoing changes in the target range will be appropriate", but that's not the same as making additional changes now.
https://www.newyorkfed.org/markets/reference-rates/effr It was 1.50 - 1.75 before.
Ah, I see, the release says to 2-1/4 to 2-1/2 percent.
Re: Federal Reserve to increase interest rates by 75 basis points
#13what does this mean/imply: > In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities
The fed has been keeping the prices of these artificially inflated through QE. They've stopped buying (they aren't selling yet, but simply letting securities mature) and the massive reduce in demand leads to a decline in prices of the corresponding assets.
> The fed has been keeping the prices of these artificially inflated through QE
No, as the word “continue” implies, it has been, and plans to go on with, keeping the prices artificially low via Quantitative Tightening. QE ended a while back.
Re: Federal Reserve to increase interest rates by 75 basis points
#14Earlier quoted context omitted.
The fed has been keeping the prices of these artificially inflated through QE. They've stopped buying (they aren't selling yet, but simply letting securities mature) and the massive reduce in demand leads to a decline in prices of the corresponding assets.
> The fed has been keeping the prices of these artificially inflated through QE No, as the word “continue” implies, it has been, and plans to go on with, keeping the prices artificially low via Quantitative Tightening. QE ended a while back.
QE4 ended in March '22. I'm not sure the particular nuances of the timeline matter to the person asking the question.
Re: Federal Reserve to increase interest rates by 75 basis points
#15what does this mean/imply: > In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities
During the pandemic (and also during the response to 2008 recession) the Fed has been injecting cash into the market by buying Treasury securities and mortgage-backed securities. This is what "Quantitative Easing" is, and is a relatively new tool used by the Fed that they started leaning on when interest rates really could not go much lower. (https://en.wikipedia.org/wiki/Quantitative_easing)
Now the Fed has a really large backlog of these securities, and they are starting to unwind that by selling those securities off, effectively removing cash from the economy and slowing down economic activity (and therefore hopefully inflation).
Re: Federal Reserve to increase interest rates by 75 basis points
#16Is 75 basis points correct? The actual press release appears to describe an increase from 2-1/4 percent to 2-1/2 percent, which is only 25 basis points. It says it "anticipates that ongoing changes in the target range will be appropriate", but that's not the same as making additional changes now.
Interest rates are not a single set percent, they are in a range IIRC. So it's going from 1.5-1.75 to 2.25-2.5, a 75 basis point increase.
Re: Federal Reserve to increase interest rates by 75 basis points
#17damn, inflation in my country will be crazy after this. our gas prices are already really high (the government had to subsidize it until the end of the year to have a chance of being reelected). now probably this crazy politic will be nullified since the dollar will get more expensive
Dollars becoming more expensive is the exact opposite of inflation.
ok I get it they don't live in the US don't need 8 people all posting at the same time to tell me this
Re: Federal Reserve to increase interest rates by 75 basis points
#18damn, inflation in my country will be crazy after this. our gas prices are already really high (the government had to subsidize it until the end of the year to have a chance of being reelected). now probably this crazy politic will be nullified since the dollar will get more expensive
As they say: "the US dollar is our currency but it is your problem"
Re: Federal Reserve to increase interest rates by 75 basis points
#19damn, inflation in my country will be crazy after this. our gas prices are already really high (the government had to subsidize it until the end of the year to have a chance of being reelected). now probably this crazy politic will be nullified since the dollar will get more expensive
Don’t know why you’re getting downvoted. Raising rates in the US has a deep and interesting affect on the inflation of other countries.
Re: Federal Reserve to increase interest rates by 75 basis points
#20damn, inflation in my country will be crazy after this. our gas prices are already really high (the government had to subsidize it until the end of the year to have a chance of being reelected). now probably this crazy politic will be nullified since the dollar will get more expensive
Dollars becoming more expensive is the exact opposite of inflation. ok I get it they don't live in the US don't need 8 people all posting at the same time to tell me this
Not for other countries that have to print more of their own currency to try and afford more dollars.