What a joke! They have been pumping trillions into the economy sice 2008 and they think 3/4 percent rate will make things better.
On July 27, the Federal Reserve announced another big rate hike, raising the federal funds rate by 75 basis points (bps), to a range of 2.25% to 2.5%.
This move follows a 75 basis-point hike in June and two smaller rate hikes at the March and May Federal Open Market Committee (FOMC) meetings—all part of the central bank’s strategy to fight stubbornly high inflation.
The Fed’s decision today is not as aggressive as the 100 bps increase that had been rumored for the FOMC’s latest meeting. But it’s more bold than the smaller hikes that started the year, indicating the Fed’s desire to get inflation under control as soon as possible.
The FOMC will meet three more times in 2022. Federal Reserve Chair Jerome Powell said in a press conference following the latest announcement that another “unusually large” rate hike could “be appropriate” at the next meeting in September.
“These rate hikes have been large and have come quickly and it’s likely that their full effect hasn’t been felt by the economy,” Powell said. “There’s probably significant additional tightening in the pipeline.”
The latest PCE reading showed consumers are paying prices up 6.3% over the prior 12 months. Fed economists estimate that PCE inflation will remain high, but should decline to 5.2% by the end of 2022. Note that is hotter than the 4.3% forecast made back in March.
Read more: The Personal Consumption Expenditures (PCE) Price Index
Unfortunately for stretched consumers, inflation can take a long time to get under control, and it may take several months for the Fed’s moves to work their way into the economy—although some financial effects of its policies, such as higher interest rates on borrowed money, can be felt more quickly