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.

Video Articles

Gold Drilling Scaled to 60,000 Meters: How Big Can This Get? | Roger Rosmus – Goliath Resources

Baselode Energy To Acquire Forum Energy: The Merger Of Equals Deal

TriStar Gold: The Revised Castelo de Sonhos Prefeasibility Study

Recommended

Antimony Resources Drills 4.17% Antimony Over 7.4 Metres At Bald Hill

ESGold To Expand Mine Building At Montauban In Advance Of Gold & Silver Production

Related News

FOMC Minutes Suggest ‘Mild Recession’ Is En Route, Little Progress on Disinflation

Since the last FOMC meeting in March, much of the upheaval surrounding the US and...

Wednesday, April 12, 2023, 02:42:45 PM

Broad Markets: Start Asking The Right Questions.

We’re beginning to regret having equipped The Dive’s custom apocalypse bunker in an undisclosed location...

Monday, April 6, 2020, 11:25:10 AM

Milk Prices Set To Go Up Another 2.5% Due To Inflation

The Canadian Dairy Commission (CDC) has approved a second milk price increase this year to...

Thursday, June 23, 2022, 11:16:00 AM

Jerome Powell Raises Rates by Another 25 Basis Points

As was widely expected, Federal Reserve Chair Jerome Powell raised borrowing costs by another 25...

Wednesday, July 26, 2023, 02:06:11 PM

US Treasury Yields Respond To Fed’s Relaxed Inflation Policy

US bond markets appeared to have reacted rebelliously to the Federal Reserve’s phlegmatic stance on...

Friday, March 19, 2021, 10:34:00 AM