Fed: Inflation, Ukraine Biggest Threats to Financial System

[bluewater]

Source: NBC News

The Federal Reserve said Monday that Russia's war in Ukraine and surging inflation are now the greatest threats facing the global financial system, supplanting the coronavirus pandemic.
...
The Fed said economic uncertainty has increased since the bank's previous report, with the Ukraine war being a big part of the deterioration. The bank also highlighted the large fluctuations in asset prices — from Treasuries to stocks — as investors reevaluate risk in a high-inflation environment.

“Inflation has been higher and more persistent than expected, even before the invasion of Ukraine, and uncertainty over the inflation outlook poses risks to financial conditions and economic activity," the Fed said in its report.

The Fed said persistently high inflation may require central bankers to quickly raise interest rates, which could also be a potential risk for financial instability in the form of lower economic output as well as higher borrowing costs for individuals and businesses. It could cause debt levels, which the Fed says are elevated but not yet a major concern, to become unsustainable for some businesses.






Read more: https://www.nbcnewyork.com/news/national-international/fed-inflation-ukraine-biggest-threats-to-financial-system/3679103/?msclkid=33d57769cfe111ec8242a66a021c9587

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The Fed said persistently high inflation may require central bankers to quickly raise interest rates, which could also be a potential risk for financial instability in the form of lower economic output as well as higher borrowing costs for individuals and businesses.

I posted two articles on the this topic today. In the first, experts said that interest rates must be lowered at once to ensure a soft landing for the stock market and to avoid further economic instability. In this article, the Federal Reserve says persistently high inflation might require raising interest rates sharply, while hedging that doing so could result in financial instability.

Wonderful. Just wonderful.

The fear is that we might get the worst of both outcomes, persistent inflation and a recession leading to further significant stock declines.

[turbinetree]

1. Did the reserve talk about the greed from wall street being perpetuated by the big banks

and private equity people.....maybe they should have read this article from Mother Jones....

https://www.democraticunderground.com/?com=view_post&forum=1014&pid=2914294

[hueymahl]

2. The Fed is a joke

They are pretty much always wrong about everything and always trying to play catch up. Not to mention that they are far more concerned about protecting big banks than the average person.

They caused this mess buy over stimulating the economy. Now we are headed for a massive recession, one they are purposefully engineering.

[oldsoftie]

3. The voters are going to vote based on their pocketbooks. Fair or not.

If record high gas & shortages are still the norm in Nov; we're in big trouble

[bluewater]

4. Many mid-income voters also vote based on their 401k's

Since most people have most of their retirement savings in their 401k's, the stock market decline is a case of Wall Street directly impacting Main Street.

[Xolodno]

9. Yeap.

I always wished there was an expansion to Social Security that allowed to contribute more but was part of an individual account that you completely owned.

It would soften the blow if you got laid off in your 50's in the middle of a recession.

[oldsoftie]

10. Definitely. And more have 401Ks today than ever before.

[onecaliberal]

5. Why does it seem that all these government departments are being run by fucking lying

Criminal rapeublicons?

[Hoyt]

6. Is greedy Gerber, etc., withholding infant formula so price is up 18%?

[Xolodno]

7. Several things...

1. Fed was too slow to implement rate hikes.

2. The erroneously put their head in the sand and thought the supply chain issues would resolve itself and there would no need to do a hike.

3. Number two didn't happen because Putin started a war. We don't trade much with Russia, but rest of the world does. And we trade with the nations that implemented sanctions. So it does eventually hurt us (people forget, sanctions work both ways).

4. China is holding back supplying goods because of Covid lockdowns. Which may not be necessary to be that strict. Could be an intentional economic shock to punish the West and help Putin. We gave a lot of criticism to China from Hong Kong to Uyghurs to Taiwan. And have worked to limit their influence in the area and snubbed them at the Olympics. It's bound come back and bite us.

[oldsoftie]

12. What's bound to come back & bite us is continuing to get so much FROM China.

Its time to put a stop to this insanity of buying so many critical items from one of our biggest enemies.

[Hoyt]

13. Yeah. Let's take our wealth, go home, and triple the defense budget

for when China decides to draw lines.

Do agree we need to ensure domestic supply of critical materials and items. Don’t think that means America First trade policies are proper.

[oldsoftie]

17. I said elsewhere that "America First' needs to simply mean get OUT of china.

Make stuff here if possible, sure. But use Singapore, Taiwan, Mexico, whoever. Just NOT China.
And China has increased the size of their military by enormous amounts over the past decade. In reality they're spending far more than WE are.

[Xolodno]

14. We tried to, it was called the TPP. Trump killed it.

And many in Congress made it into a political football like they did with NAFTA.

The remaining signatory nations still went through with it and its now the CPTPP. However many conditions are now removed (that we insisted on). And now China is talking about joining the CPTPP.

[oldsoftie]

18. TPP wouldn't have gotten one US company out of china.

I'm starting to think only some new laws will force that

[Hoyt]

20. A few Democrats bashing Obama and Clinton on TPP is one reason we had trump's reign of terror.

[yaesu]

8. Covid read this and said hey, don't count me out yet. The Fed is the biggest threat to the bottom 99

percents economy.

[chowder66]

11. I really wish they would have said Russia biggest threat instead of Ukraine.

It implies that it's Ukraines fault.

[texasfiddler]

15. I was about to post: Russia and Inflation are biggest threat. You beat me to it.

Messaging is so important. I have become super sensitive to it.

[chowder66]

19. I agree. Messaging is so important.

[bucolic_frolic]

16. The Fed should have acted last November when they announced their intent to act

instead of waiting 6 months

[XanaDUer2]

21. I'm losing money i can't afford nt