The Fed raises interest rates by only 0.5%. Will it be enough to avert the crisis?
As expected, the FED has factored in the decline The Federal Reserve raised the fed funds rate by 50 percentage points, to 4.25%-4.5%, during its last monetary policy meeting in 2022, driving costs up financing at the highest level since 2007 and in line with market expectations. It was the seventh consecutive rate hike, after four consecutive three-quarter point hikes. Policy makers reiterated that continued hikes in the target range will be appropriate to achieve a monetary policy stance tightening enough to bring inflation back to 2%. The Fed now expects interest rates to reach 5.1% next year, 4.1% in 2024 and 3.1% in 2025, higher than previously indicated. Meanwhile, GDP growth forecasts have been revised up for this year (0.5% vs. 0.2%), but down for 2023 (0.5% vs. 1.2%) and 2024 (1.6% against 1.7%). Inflation forecasts have been revised upwards for 2022 (5.6% vs 5.4%), 2023 (3.1% vs 2.8%) and 2024 (2.5% vs 2.3%) . Here is the graph of the interest imposed by the FED:
and here are the interests seen from a twenty-five-year perspective
We are almost back to the level of interest of 2007, ie the levels of the subprime mortgage crisis. Now the Fed seems to be slowing down, but it will be enough, or even this level of rates will lead to another financial crisis, as many predict, also due to the combination of high inflation and the energy crisis. According to many, it's late now, and it's probably true.
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The article The FED raises interest rates by only 0.5%. Will it be enough to avert the crisis? comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/la-fed-aumenta-i-tassi-dinteresse-solo-dello-05-sara-abbastanza-ad-evitare-la-crisi/ on Wed, 14 Dec 2022 21:12:25 +0000.