75 BASIS-POINTS: Fed Embarks on Biggest Hike Since 1994 to Tame Inflation

In an attempt to preserve its rapidly-plummeting credibility, the Fed hiked rates by a shocking 75 basis points, as inflation continues to spiral out of control to no avail.

Following the completion of the FOMC’s two-day meeting, the Fed decided to raise its overnight rate to 1.75%, signalling it is “strongly committed” to tackling inflation. The last time borrowing costs were hiked 75 basis points was 1994, suggesting that the Fed is embarking on a much-needed damage control after failing to abandon its transitory narrative even when everyone else and their dog realized that rapidly-accelerating consumer prices were here to stay.

The last time the central bank raised rates by that much resulted in the IMF having to bail out Mexico after the peso dramatically devalued against the US dollar. The (largely expected) bloodbath has thus far sent Treasury yields soaring, gold plummeting, and the spread between the 2-year and 10-year to 0.13.

But, the most dramatic outcome of the FOMC meeting were members’ projections on the forthcoming state of the US economy, where growth and employment outlooks were significantly lowered. The infamous dot-plot sharply increased from the March meeting, with expectations of the federal funds target rate increasing by 175 basis points to 3.4% before the end of the year, followed by 3.8% in 2023 and 3.4% the following year. That is compared to previous forecasts calling for a rate of 1.9% in the current year, and 2.8% for both 2023 and 2024.

The Fed now projects that America’s economy will only grow by 1.7% in 2022 and 2023, compared to previously ambitious forecasts calling for an expansion of 2.8% and 2.2%, respectively. while the unemployment rate rises from 3.7% in 2022 to 4.1% come 2024. So much for a soft landing.

Information for this briefing was found via the Federal Reserve and CNBC. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Leave a Reply

Video Articles

Endeavour Mining Q1 Earnings: Cash Flow Is King

G Mining Oko West Feasibility: Move Fast, Break.. Nothing?

New Gold Q1 Earnings: What’s Behind The Market’s Surprising Reaction?

Recommended

Giant Mining Encounters Native Copper As Hole MHB-34 Hits 563 Metres Depth

Verses Hits Commercialization Stage With Genius AI Platform

Related News

Bank of America: Stock Rebound is Only a ‘Textbook’ Bear Market Rally, Further Declines Likely to Come

Although stocks have strongly rebounded from the lows witnessed earlier this summer as investors became...

Friday, August 26, 2022, 01:24:00 PM

Not Just inflation: People Are Buying Less Food, Joe Weisenthal Suggests Ozempic May Be to Blame

Reports say that inflation concerns have prompted consumers to tighten their belts when it comes...

Monday, July 17, 2023, 03:08:00 PM

Rising Home, Rental Costs May Force Central Banks to Raise Rates More Than Expected

When discussing the stickiness of inflation and the need for central banks to raise interest...

Tuesday, May 3, 2022, 03:41:00 PM

Jerome Powell Finally Concedes Inflation is Rampant, Sen. Warren Calls Him a ‘Dangerous Man’ to Lead the Fed

Major US stocks and indices were sent sharply plummeting on Tuesday, as markets began to...

Wednesday, September 29, 2021, 04:52:00 PM

Citi Bank: UK Inflation Will Hit 18.6% in 2023 and Rising Interest Rates Likely Won’t Help

The outlook for the UK’s economy is becoming increasingly more bleak. A recent study conducted...

Friday, August 26, 2022, 12:36:00 PM