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Fed increases target rate to 3.75-4.00%

federalreserve.gov

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Re: Fed increases target rate to 3.75-4.00%

#91

Post by ren_engineer »

r00fus wrote: post #33

This will do nothing for actually impacting inflation. Instead it will crash the economy. Real inflation seems to be due to price gouging by companies[0], combined with energy increases due to OPEC price fixing [1], and rent increases due to collusion [2] and corporate domination housing market [3]. Jerome Powell had no answers to the Senate Oversight committee when asked how increasing rates would actually reduce th…

energy companies are simply acting rationally based on the fact that governments have made it clear they want to eliminate them, short term profit maximization is logical. Why would oil companies invest in refineries that will not only cut their profit margin by increasing supply but be shut down by the government in 20-50 years making the investment worthless? This is logic a 5 year old can understand but apparently is too much for the current executive branch to grok

every single current economic issue is a direct result of government actions during the pandemic and trying to achieve long term ideological goals that weren't based on rational decision making

Re: Fed increases target rate to 3.75-4.00%

#92

Post by bern4444 »

dragontamer wrote: post #2

Not much to say here since this was foretold / expected. All eyes on the 2:30pm press conference, where people will hope to divine the future from Powell's statements. I'm going to bet ~40 minutes of "Inflation isn't at 2% yet and we're committed to reducing inflation to that level". I think what people really want to know is, where do these rate-increases end? In Sept. 22nd meeting, Powell thought 4.5% was roughly w…

The answer from the meeting was effectively, "we don't know".

People continue to underestimate the final rate and duration we'll end up at.

The market shot up initially on a 3 line statement in the released notes that was interpreted as beginning of the end of rate hikes.

Then the press conference started and the market shot right back down as Powell said we don't know how high and how long rates will go for.

I'm banking on another 75 bps raise in December and then another in January and then maybe a slow down to one or two 50 bps raises and then maybe a 25 bps finale.

I'm starting to love the yields on bonds. 3 month T Bill at 4+% is sweet. Hoping to continue collecting this sweet sweet guaranteed returns that I can ladder into.

Re: Fed increases target rate to 3.75-4.00%

#93

Post by wcarss »

whimsicalism wrote: post #46
r00fus wrote: post #33

This will do nothing for actually impacting inflation. Instead it will crash the economy. Real inflation seems to be due to price gouging by companies[0], combined with energy increases due to OPEC price fixing [1], and rent increases due to collusion [2] and corporate domination housing market [3]. Jerome Powell had no answers to the Senate Oversight committee when asked how increasing rates would actually reduce th…

> Real inflation seems to be due to price gouging by companies Yes, it is too bad that our previously benevolent corporations all decided to end that benevolence in the year 2021 and gouge prices. > crash the economy for his buddies on Wall Street Of course, exactly what Wall Street wants.

It wasn't said that corporations were good but now are not, and it is not a requirement for the above to be relevant or true.

The theory is that corporations will price at the highest price the market will bear and know that price from price tests they are willing to perform. "Inflation in the air" gave them all an impetus to more aggressively explore the space of prices consumers would bear, and it turns out, people who eat chips mostly won't stop buying them when they're 1.5x the price and the packaged weight is cut by 25% over a 2 year period -- and the same follows for a huge number of similar goods.

This is an acceleration of processes that were already under way, but it's also likely enabled by, likely not directly caused by, and likely feeding into "inflation", and it's likely not something that rate changes will directly impact -- though, maybe a second order change, e.g. a crash to the economy, could hurt workers to such a degree that they simply cannot possibly both buy chips and live. That might finally curb price hikes and would indirectly have fought inflation.

Re: Fed increases target rate to 3.75-4.00%

#94

Post by linguae »

agildehaus wrote: post #16

I just started to have enough money for a decent downpayment on a house when all this rate hike started. Now I'm basically priced out.

Same here. When I started my search last year, while I could afford the mortgage payments, I kept getting outbid on everything I could find within my price range ($550,000). This year I'm priced out due to the doubling of interest rates. Home prices in the area I'm looking at (the Monterey Bay Area and some of the Central Valley exurbs of the Bay Area) have fallen a little bit since this summer, but they are still dramatically higher (roughly 30-50%) than they were in 2020 when the pandemic started. My performance-based salary increases haven't kept up with inflation. Thus I'm stuck renting my one-bedroom apartment longer.

Re: Fed increases target rate to 3.75-4.00%

#95

Post by [deleted] »

r00fus wrote: post #89
WillPostForFood wrote: post #82

Earlier quoted context omitted.

>banks want to crash the economy so their wealthy clients can get in at the bottom This is like the left wing version of q anon craziness. Banks don't want the economy to crash - they are big losers when it crashes.

This is your point to prove. I proved Fed gets lobbied (see GP comment).

[deleted]

Re: Fed increases target rate to 3.75-4.00%

#96

Post by scotuswroteus »

r00fus wrote: post #33

This will do nothing for actually impacting inflation. Instead it will crash the economy. Real inflation seems to be due to price gouging by companies[0], combined with energy increases due to OPEC price fixing [1], and rent increases due to collusion [2] and corporate domination housing market [3]. Jerome Powell had no answers to the Senate Oversight committee when asked how increasing rates would actually reduce th…

Can't wait for your even handed replies to being challenged on literally anything here, lmao

Re: Fed increases target rate to 3.75-4.00%

#97

Post by SideQuark »

connorgutman wrote: post #67
hornd wrote: post #42

Earlier quoted context omitted.

This is the current talking point du-jour of the American progressive left, but I think it's safe to say the Fed knows what they're doing and have done this before.

Ah yes, the almighty Fed which knew exactly what to do in 2020, 2008, 2001, 1990, 1987...

Yes, the Fed that stopped the much longer, more frequent, and deeper panics and recessions that occurred before it.

In fact, it did so well for so long compared to previous methods, that the Great Moderation is a term in economics for the stability it gave.

Instead of snarkily listing places you think it failed, compare that to pre-Fed failures, and you'll see that the Fed is a lot better than other solutions.

And there's ample economic evidence central banking is much better than anything before it, which is why every single country in the world has adopted it.

https://en.wikipedia.org/wiki/List_of_recessions_in_the_Unit...

Re: Fed increases target rate to 3.75-4.00%

#98

Post by yunwal »

WillPostForFood wrote: post #82
r00fus wrote: post #62

Earlier quoted context omitted.

The "Fed" isn't some apolitical entity. It's lobbied and banks want to crash the economy so their wealthy clients can get in at the bottom. They have an agenda.

>banks want to crash the economy so their wealthy clients can get in at the bottom This is like the left wing version of q anon craziness. Banks don't want the economy to crash - they are big losers when it crashes.

Banks are big losers when the economy crashes and they don't anticipate it. Overall if there's no turbulence there's no way to make money as a bank.

Re: Fed increases target rate to 3.75-4.00%

#99

Post by gitfan86 »

apropos_g wrote: post #4

"I am once again asking for" a common sense explanation for how increasing interest rates will reduce the prices of retail food and gas. (This should be the new Deleuze meme.)

They are not targeting retail food and gas specifically. The hope is that removing money from the economy will cause spending to slow down everywhere and that eventually will hit food.

Re: Fed increases target rate to 3.75-4.00%

#100

Post by metabagel »

ren_engineer wrote: post #91
r00fus wrote: post #33

This will do nothing for actually impacting inflation. Instead it will crash the economy. Real inflation seems to be due to price gouging by companies[0], combined with energy increases due to OPEC price fixing [1], and rent increases due to collusion [2] and corporate domination housing market [3]. Jerome Powell had no answers to the Senate Oversight committee when asked how increasing rates would actually reduce th…

energy companies are simply acting rationally based on the fact that governments have made it clear they want to eliminate them, short term profit maximization is logical. Why would oil companies invest in refineries that will not only cut their profit margin by increasing supply but be shut down by the government in 20-50 years making the investment worthless? This is logic a 5 year old can understand but apparently…

None of what you wrote makes any sense to me. Almost without exception, corporations don’t plan 20 years into the future.

You left out supply chain disruptions and consumer demand fluctuation due to the pandemic.

It more seems to me like you have an ideological story you’d like to sell.

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