Federal Reserve Raises Rates for First Time Since 2018 as Expected by 25 Basis Points

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    Atlanta Fed President Raphael Bostic in an interview with the Financial Times:

    Every option is on the table for every meeting
    If the data say that things have evolved in a way that a 50 basis point move is required or [would] be appropriate, then I am going to lean into that
    Comfortable with moving in successive meetings
    Sticks to 3 rate increases in 2022 with the first in March
    Will be looking for deceleration in monthly CPI price gains
    Looking for further evidence that rising wages are not feeding meaningfully into higher inflation
    Encouraged by latest employment cost index and expects a moderation in wage growth going forward
    Says markets are acting rationally and responding with tighter financial markets
    Supports reducing the $9T balance sheet as quickly as possible without impairing market functioning
    He is optimistic on the economy
    If we do three hikes, that’ll still leave our policy in a very accommodative space
    The market is now pricing up to 5 fed funds increases in 2022

    • This reply was modified 2 years, 4 months ago by TradersCom.
    Helmholtz Watson

    St. Louis Fed president James Bullard via Reuters Spaces interview:

    I would support a rate increase at March meeting
    I would also prefer to raise rates at May meeting if I was deciding today
    inflation is quite high right now
    I don’t think a 50 basis point incrrease really helps us right now
    we are doing a light here even though we haven’t yet raise rates
    I am thinking of March meeting and second-quarter for potential rate hikes, and then getting going on balance sheet reduction
    In July and August we’ll be able to assess how robust inflation seems for rest of the year and adjust accordingly
    If inflation ebbs as expected, we may not have to be as aggressive and second half of the year


    In the nine quarters beginning Q3 2019, outstanding Treasury debt expanded $6.4 TN, or 36%, to a record $24.3 TN. Treasury debt has increased 300% since 2007. Since September 2019, Non-Financial Debt has expanded an unprecedented $10.4 TN, or 20%. Federal Reserve Assets surged $5.14 TN in 127 weeks to $8.911 TN, having now inflated almost 10-fold since 2007.


    Fed’s Williams via Reuters )

    uncertainty around the economic outlook is great and situation in Ukraine adds to that
    for the us, first direct effects of Ukraine crisis are higher energy prices factoring into higher inflation
    a negative supply shock to oil can have a hit on consumers’ ability to spend
    people still have a lot of savings built up to support spending
    the economy is coming into this with a lot of forward momentum
    says longer term inflation expectations are not moving that much
    Fed has to take actions to get inflation back down to 2% goal and make sure inflation expectations stay anchored
    consumers are willing to pay higher prices when demand is strong
    businesses are facing higher costs from wages or import prices and other things
    pricing power will shift as supply shortages are addressed
    some adjustments in demand and labor market may take longer than initially expected
    there’s a lot more labor supply out there, it will just take a while to see how much and when it comes back
    Fed doesn’t know exactly what the fed funds rate will be next year because it will depend on the economy
    it’s clear with inflation so high that the fed needs to get monetary policy away from where we are today
    Fed should move the fed funds rate above near zero levels through a series of rate increases
    Fed will want to move the balance sheet back to more normal levels
    says this is the year of both moving the fed funds rate to more normal levels and also of starting balance sheet reduction


    The Federal Reserve raised rates by a quarter of a percent at their March meeting, The QE Taper pace as scheduled ended in March. The rate hike was pr
    [See the full post at: Federal Reserve Raises Rates for First Time Since 2018 as Expected by 25 Basis Points]

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