Fed raises interest rates by 75 basis points

[DemocratSinceBirth]

Sees inflation falling to three percent by 2024.

[TheRealNorth]

1. Question for those old enough to remember

Did the Fed hike interest rates in the 1970's during the inflation caused by the oil embargo?

[Johnny2X2X]

3. They did

They increased it from 7% to 11% in 1974.

The Fed wants overnight lending to stay at a sweet spot of between 2% and 5%. We're at around 1.5-1.75%, so we have plenty of room to raise it and still maintain a stable (good) economy.

[DemocratSinceBirth]

4. They did and a lot.

[Johnny2X2X]

2. They botched this badly

You raise interest rates when the economy is going full bore. 2021 was the year, we had the best growth in 40 years and instead of taking action then, they pretended inflation was transitory and now are waving their hands when the economy is already shrinking.

The Fed totally blew this for our country!

[TheRealNorth]

5. That's what I think too...

There may be an "economics" argument if you want to argue that wages are going up "too much". But I don't see how making capital more expensive is going to fix our inflation issues, which appear to be driven by lowered supply due to the Saudis cutting oil output, and our oil embargoes against Russia, Iran, and Venezuela. Couple that with worker shortages caused by Covid (we lost 300,000 people under the age of 65), as well as anyone over 65 that was still working that died, or is reluctant to work now due to Covid. And then there is the supply chain issues and production issues causing shortages and therefore scarcity that results in higher prices.

While Iay personally benefit by increased interest rates (IF it pushes home prices down), I don't see how making it more expensive to borrow is going to fix any of the issues driving inflation.

[DemocratSinceBirth]

6. The Fed wants to crush demand.

The problem is the demand for food and gas are largely inelastic.

[TheRealNorth]

7. Gotta protect the bank accounts of the 1%

[Johnny2X2X]

9. I don't even think it's that

The 1% doesn't want a recession. I think it was just a gross miscalculation.

[BettyonRed]

8. 100% this...

They screwed this up bad….printing cash versus taking action