The U.S. Federal Reserve on Wednesday raised its benchmark interest rate by 75-basis points for the first time in nearly three decades in an attempt to cool inflation not seen in over 40 years.
Megan Henney for FOX Business:
The 75-basis point hike – the first since 1994 – underscores just how serious Fed officials are tackling the inflation crisis after a string of alarming economic reports. The move puts the key benchmark federal funds rate at a range between 1.50% to 1.75%, the highest since the pandemic began two years ago.
Officials also laid out an aggressive path of rate increases for the remainder of the year, with new economic projections released after the two-day meeting showing that policymakers expect interest rates to hit 3.4% by the end of 2022, which would be the highest level since 2008.
Stocks rallied following the announcement.
A dismal Labor Department report last week showed the consumer price index rose 8.6% in May from a year ago, the fastest pace of increase since December 1981, dashing economists’ hopes that the inflation spike was starting to fade. And a different survey released Monday showed that households are bracing for notably faster price increases – a worrisome sign because Fed officials believe such expectations can be self-fulfilling.
[Federal Reserve Chairman Jerome] Powell signaled that a half-point or three-quarter point increase is most likely in July, though he reiterated that officials will make their decision on a meeting-by-meeting basis.
MacDailyNews Take: Hopelessly reactive and still too slow – from the geniuses who brought you “transitory.”
This January, Interactive Brokers founder Thomas Peterffy said, “Inflation is 7% — 1% or 2% [in interest rate hikes] doesn’t mean anything. If they really wanted to stop inflation, they would have to raise rates to 4%, 5%, 6%.”
When the so-called “experts” were calling inflation “transitory” [was it a] joke, ignorance, or lie? – MacDailyNews, April 11, 2022
‘Tis best to get a handle on inflation, if you know how, while you still can. – MacDailyNews, May 11, 2021
Inflation is repudiation. — Calvin Coolidge
When a business or an individual spends more than it makes, it goes bankrupt. When government does it, it sends you the bill. And when government does it for 40 years, the bill comes in two ways: higher taxes and inflation. Make no mistake about it, inflation is a tax and not by accident. — Ronald Reagan
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