Article

2022-01-27 Economy

Fed signals first interest rate hike coming in March as it scrambles to curb inflation

[Washington Examiner] The Federal Reserve has signaled that the first interest rate hike in years is on the horizon as it moves to leave its pandemic crisis posture and limit inflation.

The Federal Open Market Committee released its decision Wednesday after a two-day monetary policy meeting. The central bank said in a statement that "it will soon be appropriate to raise" its interest rate target.

Bond markets reacted to Wednesday's announcement by raising the implicit odds of a rate hike in March to 95%.

Economists and investors have been eagerly awaiting news on when the central bank will decide to start raising rates from the near-zero level they have been at since the outset of the COVID-19 pandemic. The last time interest rates were hiked was in 2018.

The Fed also announced Wednesday that its asset-purchasing program will end at the beginning of March.

Posted by Besoeker 2022-01-27 06:33|| || Front Page|| [11129 views ] Top

#1 Oh, no! Not a hike to 1/4 of 1%. We will all DIE!

Posted by Tom 2022-01-27 10:53|| 2022-01-27 10:53|| Front Page Top

#2 I was in the markets and remember when you could get short term commercial paper from a decent company for an 18% annualized return. T-bills were above 12 and 10 yr t-bonds were over 10 at one point. Paul Volker and the Fed fixed rampant inflation with draconian speed. These mopes under Yellen et al are just mouthing political theater for the press. 1/4 is an insulting joke to fix the results of our Venezuelan monetary policy ...

Posted by NoMoreBS 2022-01-27 12:25|| 2022-01-27 12:25|| Front Page Top

#3 NMBS, that was before our UniParty hit upon their miraculous policy of Serial Asset Bubbles stoked by a lax Fed and deficits as far as the eye can see.

Productivity's been falling since 1970. Even the supposed digital tech / computer-driven increases in the late 1990s were illusory. Per Robert Gordon's research, nearly all the really big breakthroughs occurred from 1870-1930 or so.

Allison Nathan (Goldman Sachs): Why has productivity growth stalled?

Robert Gordon (Northwestern U.): Let me put this in perspective. For the total economy, productivity growth was 2.7% from 1920 to 1970, 1.6% from 1970 to 1994, 2.3% from 1994 to 2004 during what we call the dotcom era, and just 1.0% from 2004 to the second quarter of 2015. So the productivity growth of the last 11 years was not only slower than in the dotcom era, but even slower than in the so-called slowdown period beginning in the early 1970s.

The reason for the slowdown after 1970 is straightforward: we simply exhausted the productivity benefits of prior innovations.

In the late 19th century, hugely important “general purpose” technologies, like electricity and the internal combustion engine, were invented. Then there were major developments in entertainment and communication in the form of the telephone, telegraph, radio, motion pictures and television. We made major breakthroughs in health. And we vastly improved working conditions.

All of that came together between 1920 and 1970. The last three spin-offs of the great inventions— interstate highways, commercial air travel, and air conditioning in most businesses—were also largely complete by 1970. So at that point we had run through the productivity payoffs.

We have also now run through the payoffs of the digital revolution that followed. Between 1980 and 2005 there was a total transformation of business practices from paper and filing cabinets to flat screens and search engines. But that transition is over. And the temporary revival of productivity during the dotcom era was uniquely concentrated in a very short span, with remarkably few gains in productivity growth since.

We’re using software and computers now that are very similar to the ones we used ten years ago. So it is no surprise that productivity growth has been slower over this decade.

Posted by Merrick Ferret 2022-01-27 12:58|| 2022-01-27 12:58|| Front Page Top

#4 Stuff is icky. We should be on a metaverse economy where you can own real estate that doesn't exist and go to your imaginary job and be paid in ZuckCoins (they just cancelled that project.) Really. Let the people who believe in that abandon the real world. It will leave more of everything for the rest of us...

Posted by M. Murcek 2022-01-27 13:02|| 2022-01-27 13:02|| Front Page Top

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