Federal Reserve to increase interest rates by 75 basis points for the third time
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Re: Federal Reserve to increase interest rates by 75 basis points for the third time
#2I was wondering why they don't move the interest rate up continuously over a period instead of flat jumps. Is the shock of jumping up in one day useful economically? That would be slightly confusing, because it seems like I'm always reading that the market has already priced in changes to the interest rate by the time the announcement comes out.
Re: Federal Reserve to increase interest rates by 75 basis points for the third time
#3I'm wondering if they are going to bite the bullet and raise like Volcker.
But again I realized that I actually do not understand the source of inflation and how much contribution each source has. We all know that the war, Covid and monetary policy are three sources but are there other structural sources? What about the trade quarrel between US and China? How much does it hurt for each industry?
I should read some papers and talk to people in different industries to get some ideas.
Re: Federal Reserve to increase interest rates by 75 basis points for the third time
#4I was wondering why they don't move the interest rate up continuously over a period instead of flat jumps. Is the shock of jumping up in one day useful economically? That would be slightly confusing, because it seems like I'm always reading that the market has already priced in changes to the interest rate by the time the announcement comes out.
It's a coarse enough instrument that changing it only a few times a year still spreads the effect out over the whole year and even if it was continuous announcing a change in the rate of change will have exactly the same effect.
Re: Federal Reserve to increase interest rates by 75 basis points for the third time
#5I was wondering why they don't move the interest rate up continuously over a period instead of flat jumps. Is the shock of jumping up in one day useful economically? That would be slightly confusing, because it seems like I'm always reading that the market has already priced in changes to the interest rate by the time the announcement comes out.
They still need to price contracts between jumps. If they move it "continuously," then the rate at any given moment is difficult to determine. Hopefully no one is using javascript to calculate it!
Re: Federal Reserve to increase interest rates by 75 basis points for the third time
#6I'm wondering if they are going to bite the bullet and raise like Volcker. But again I realized that I actually do not understand the source of inflation and how much contribution each source has. We all know that the war, Covid and monetary policy are three sources but are there other structural sources? What about the trade quarrel between US and China? How much does it hurt for each industry? I should read some pa…
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Re: Federal Reserve to increase interest rates by 75 basis points for the third time
#7I'm wondering if they are going to bite the bullet and raise like Volcker. But again I realized that I actually do not understand the source of inflation and how much contribution each source has. We all know that the war, Covid and monetary policy are three sources but are there other structural sources? What about the trade quarrel between US and China? How much does it hurt for each industry? I should read some pa…
My understanding is that the US has so much more debt now than we did in the 80s that a rate hike of that magnitude would cause too much harm for the Fed to stomach.
Re: Federal Reserve to increase interest rates by 75 basis points for the third time
#8I haven't seen any reporting on how the recent and huge amounts of QE might factor into all of this. In my primate mind, wouldn't ongoing QE curb the impact of rising interest rates on inflation?
Re: Federal Reserve to increase interest rates by 75 basis points for the third time
#9I'm wondering if they are going to bite the bullet and raise like Volcker. But again I realized that I actually do not understand the source of inflation and how much contribution each source has. We all know that the war, Covid and monetary policy are three sources but are there other structural sources? What about the trade quarrel between US and China? How much does it hurt for each industry? I should read some pa…
My understanding is that the US has so much more debt now than we did in the 80s that a rate hike of that magnitude would cause too much harm for the Fed to stomach.
Harm to who? Aren’t rate hikes beneficial to entities that have a lot of debt?
Re: Federal Reserve to increase interest rates by 75 basis points for the third time
#10I haven't seen any reporting on how the recent and huge amounts of QE might factor into all of this. In my primate mind, wouldn't ongoing QE curb the impact of rising interest rates on inflation?
QE was ended in March, and we're in full QT now.