Still a very low rate by historic standards. We've got a ways to go.
Federal Reserve to increase interest rates by 75 basis points
31–40 of 329 posts
Re: Federal Reserve to increase interest rates by 75 basis points
#32Funny that this would rocket to the front page so quickly. Shows where everyone's minds are at. A lot of folks were banking on a pivot by the fed but they failed to understand how seriously the fed now sees inflation. Sure, the fed could/should have raised even higher, but consider they need to orchestrate a less disruptive start to our next recession. They're still doing QT as well, which will also help tame inflati…
The Fed does a very good job at setting market expectations. If it sees the market is mis-aligned with its thinking, it will use soft policy tools like interviews and public statements (outside of more formal options, like regularly scheduled official FOMC press releases) to bring the market to its expectations. Markets priced a greater than 3-in-4 chance of a 75 basis point increase, which was the decision: https://www.cmegroup.com/trading/interest-rates/countdown-to...
In the preceding weeks, especially after the latest inflation report came out, markets began pricing a ~90% chance of a 100 basis point increase. Then came out the interviews to steer markets back to 75.
Re: Federal Reserve to increase interest rates by 75 basis points
#33Funny that this would rocket to the front page so quickly. Shows where everyone's minds are at. A lot of folks were banking on a pivot by the fed but they failed to understand how seriously the fed now sees inflation. Sure, the fed could/should have raised even higher, but consider they need to orchestrate a less disruptive start to our next recession. They're still doing QT as well, which will also help tame inflati…
The stock market is usually the best indicator of investor sentiment - the consensus was a 75 bps increase, that's what the market got, and as a result the market sustained gains from today.
https://finance.yahoo.com/news/stock-market-news-live-update...
Re: Federal Reserve to increase interest rates by 75 basis points
#34Earlier quoted context omitted.
California doesn’t have a central bank, so it’s not like it can print money out of thin air like the Federal Reserve. If they’re giving out stimulus, they must be getting it from tax payers, right?
Technically speaking, not all state government revenue is tax revenue; states can issue bonds or other debt
But someone has to buy the bonds if they want to give out the stimulus as dollars. What are they doing in California? I haven’t been paying attention.
Re: Federal Reserve to increase interest rates by 75 basis points
#35I don't get it. The price of gas I'm paying in the US, has dropped by 20% in the last month or so. That seems to indicate that prices are going back to normal. What prices is fed concerned about?
The price of labor. Their goal is to suppress wages. Gotta put workers back in their place or the whole system collapses.
Re: Federal Reserve to increase interest rates by 75 basis points
#36what does this mean/imply: > In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities
This is what's called "open market operations," and it's basically the first echelon of attack on inflation. If the Fed sells government (and government agency) securities, then banks buy them, returning money to the Treasury and reducing the banks' lending liquidity. By reducing the money supply, the Fed can put a brake on inflation. The overall implication is that the Fed either wants a sharp anti-inflationary shoc…
Do the banks have to buy them? Why do they buy them? Wouldn’t the bank have an advantage if it had liquidity when nobody else does?
Re: Federal Reserve to increase interest rates by 75 basis points
#37Now if we can only get states (like California) to stop giving out stimulus payments (they literally calling it inflation stimulus; learn economics 101) and drop student debt forgiveness nonsense. The fed is trying to curb inflation, while politicians are trying to get re-elected at any cost, fighting the fed.
California doesn’t have a central bank, so it’s not like it can print money out of thin air like the Federal Reserve. If they’re giving out stimulus, they must be getting it from tax payers, right?
California state debt actually went down from 2019->2021, so yeah must be from taxes.
Re: Federal Reserve to increase interest rates by 75 basis points
#38Earlier quoted context omitted.
California doesn’t have a central bank, so it’s not like it can print money out of thin air like the Federal Reserve. If they’re giving out stimulus, they must be getting it from tax payers, right?
Technically speaking, not all state government revenue is tax revenue; states can issue bonds or other debt
Which is repaid via?
Re: Federal Reserve to increase interest rates by 75 basis points
#39I don't get it. The price of gas I'm paying in the US, has dropped by 20% in the last month or so. That seems to indicate that prices are going back to normal. What prices is fed concerned about?
Gas isn't the only thing that is responsible for inflation it's only part of the equation.
Re: Federal Reserve to increase interest rates by 75 basis points
#40I don't get it. The price of gas I'm paying in the US, has dropped by 20% in the last month or so. That seems to indicate that prices are going back to normal. What prices is fed concerned about?
1. Gas prices are regional
2. The economy is more than just gas