Lots of uncertainty in the press conference following the interest rate announcement. Seems like the Fed is preparing for the possibility of more restrictive actions in the future, but is waiting for more data to see if such actions are needed. I expect the market to place a lot more weight on data released over the next few weeks.
Federal Reserve pushes interest rates above 5% for first time since 2007
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Re: Federal Reserve pushes interest rates above 5% for first time since 2007
#12Earlier quoted context omitted.
How would you prefer to do it? Like China?
Why someone has to fix it for others. Can we let people decide for themselves?
No bank is obligated to use the Fed system. Unless you want to process a Fed wire or ACH. Or you want FDIC insurance. Or you want to offer banking services to consumers. Or you want access ti the Fed window for short term liquidity.
But if you put those aside and somehow manage to get a bank charter, you could totally eschew the Fed.
Now if you do play in their ballpark you have to play by their rules. And a big one there is the rate that you’ll get on short term deposits. And given the scale it implicitly sets the pace for interbank rates as they have to directly compete with the Fed.
Re: Federal Reserve pushes interest rates above 5% for first time since 2007
#13The US have maybe a few months to completely undo their stupid sanctions on the Russians and return their money or the de-dollarizarion movement will keep gaining steam and those bank failures will look like children’s play. There’s no way the USA can survive as a world power if they keep stupidly weaponizing the dollar and weakening its status as the world currency. How do people think we will keep our standards of…
You raise a valid point so don't know why you're being downvoted. A lot of my investors reallocated their portfolios when SVB happened to minimize risk due to dollar volatility. I think perhaps this runs counter to the mainstream woke narratives whenever russia comes up
Re: Federal Reserve pushes interest rates above 5% for first time since 2007
#14Re: Federal Reserve pushes interest rates above 5% for first time since 2007
#15This whole interest rate hike exercise and its obvious effects on various markets has really made the economy seem fake to me. How can one government committee have so much arbitrary decision making power over how hundreds of millions conduct business in this country? It’s extremely demotivating.
This whole interest rate cutting exercise and its obvious effects on various markets also really made the economy seem fake .... The period of 10 years where rates were 0%+/- with 2-3++% inflation was the fake economy 5% rates with 5% inflation is the real world.
Can you please elaborate what you mean by "fake" economy?
Re: Federal Reserve pushes interest rates above 5% for first time since 2007
#16This whole interest rate hike exercise and its obvious effects on various markets has really made the economy seem fake to me. How can one government committee have so much arbitrary decision making power over how hundreds of millions conduct business in this country? It’s extremely demotivating.
All these rate hikes has made me understand how deeply manipulated the economy is. All these scary stories about the old left going to mess with the market ... It seems to me that the FED arbitrarily can manipulate the lowest return on money invested that is possible to get away with aswell as the highest rate you can expect to get on your money by some opaque banker only interest system. Like, how is printing money…
> how is printing money and giving it to the poor any worse.
You might be onto something.
Re: Federal Reserve pushes interest rates above 5% for first time since 2007
#17The US have maybe a few months to completely undo their stupid sanctions on the Russians and return their money or the de-dollarizarion movement will keep gaining steam and those bank failures will look like children’s play. There’s no way the USA can survive as a world power if they keep stupidly weaponizing the dollar and weakening its status as the world currency. How do people think we will keep our standards of…
Genie is already out of the bottle; countries are now rightfully not deeply trusting any external world powers anymore.
Expecting such short term strong and worldwide forgetfulness is a deeply irrational line of thought.
Re: Federal Reserve pushes interest rates above 5% for first time since 2007
#18Just a perspective to share from someone trying to buy property for a small business(since most people think about it from a residential POV).
Unlike residential mortgages, corporate loans are not fixed interest rates. They are all adjustable. What in 2020 seems financially sound, becomes impossible a few years later.
I can't imagine how other companies do this, do you just make sure your business can handle 12% interest rates just incase a politician decides to give away free money for a few years?
I come from (real) engineering, so everything is just math to me. However the adjustable interest rates is quite a wrench. Do I need to assume a 15% fed reserve interest rate + the 2-4% the bank piles on? Heck, 15% might be low, you never know.
I imagine that all businesses would benefit from having some long term certainty. Maybe mid/large companies can raise money or get fixed loans, but I'm at the point where I need to use my feelings(ewwww) to make a decision.
Re: Federal Reserve pushes interest rates above 5% for first time since 2007
#19Earlier quoted context omitted.
Why someone has to fix it for others. Can we let people decide for themselves?
This is the government's interest rate for lending to banks. What would people deciding for themselves look like in this case?
I don’t think the (us) government is lending to the banks, it is already on close to trillion dollar deficit, if anything it is borrowing from banks.
“People” in my comment includes groups of people too (eg companies, governments). Shouldn’t one be able to set the price of borrowing, why we must have one party deciding for everyone else.
Re: Federal Reserve pushes interest rates above 5% for first time since 2007
#20Just a perspective to share from someone trying to buy property for a small business(since most people think about it from a residential POV). Unlike residential mortgages, corporate loans are not fixed interest rates. They are all adjustable. What in 2020 seems financially sound, becomes impossible a few years later. I can't imagine how other companies do this, do you just make sure your business can handle 12% inte…
Can you hedge against it with interest rate swaps? It seems interest rate risk is probably one of the more manageable risks of a small business that is fundamentally dependent on other people's money - how do you know it's going to succeed in the first place even if rates don't increase?