Why the Fed Can Keep Rates ‘Pretty Aggressively’ in the Short Term: Economist

Zach Griffiths, Wells Fargo Senior Macro Strategist, and Jeanette Garretty, Robertson Stephens Wealth Management Chief Economist, join Yahoo Finance Live to break down consumer positions amid rising inflation and the latest Fed interest rate hike and the significance of the latest unemployment rate reading.

The Federal Reserve Raises Interest Rates by 0.75 of a Percentage Point.

THE NEW YORK TIMES: The Federal Reserve raised interest rates by three-quarters of a percentage point on Wednesday, its biggest move since 1994, as the central bank ramps up its efforts to tackle the fastest inflation in four decades.

The big rate increase, which markets had expected, underlined that Fed officials are serious about crushing price increases even if it comes at a cost to the economy.

Officials predicted that the unemployment rate will increase to 3.7 percent this year and to 4.1 percent by 2024, and that growth will slow notably as policymakers push borrowing costs sharply higher and choke off economic demand. » | Jeanna Smialek | Wednesday, June 15, 2022

Federal Reserve announces biggest interest rate hike since 1994: Fed confirms 0.75 percentage-point increase as Americans across country hit hard by rising prices and shortages of key items »

Praise Ye the Lord! – Mark

US Stocks Worst Day since 2020 amid Recession Worries

THE GUARDIAN: Recession fears are swirling through the markets again, as rising inflation and snarled supply chains hit economies, driving up the cost of living and hitting some company profits.

Last night, US stocks posted the biggest daily drop in almost two years, on concerns that economic growth will falter as central bankers look to raise interest rates to stem the surge in inflation.

Fed chair Jerome Powell’s determination to keep lifting borrowing costs until inflation falls meaningfully has rattled Wall Street, and is likely to push European markets lower today too.

The S&P500 fell more than 4% lower yesterday, Nasdaq slumped more than 5% and the Dow slid more than 3.5%. » | Graeme Wearden | Thursday, May 19, 2022

Recession: The Price Britain Will Pay to Control Inflation

THE GUARDIAN: Analysis: As the Bank of England raises interest rates the message is clear – the 1970s are back

Unemployment rising. Inflation above 10%. Energy prices soaring. Living standards squeezed. The message from the Bank of England was crystal clear: the 1970s are back.

The word stagflation was not to be found in the 100-plus pages of Threadneedle Street’s monetary policy report. Yet a period of weak growth and rapidly rising prices is precisely what the Bank says is in store for the UK. The current post-lockdown bounce will be short-lived and, in a real blast from the past, the economy will be driven into recession to bring inflation under control.

Nor is the pain likely to be over quickly. The economy is expected to contract by 0.25% in 2023 and remain weak in the next two years. Unless things take a marked turn for the better, the next general election will take place against a backdrop of weak growth and lengthening dole queues. » | Larry Elliot, Economics editor | Thursday, May 5, 2022

Bank of England raises interest rates as it warns of recession and 10% inflation: Rise to 1% is fourth successive increase and highest level since February 2009 »

Related.

Interest Rate Rise: Now UK Faces Prospect of a Recession

May 5, 2022 • Sky's Economic Editor Ed Conway says the Bank of England is warning a recession could be ahead, and this, combined with double-digit inflation and stalling growth, means a toxic cocktail for the economy.

Warning of economic downturn as interest rates rise: The Bank of England has warned the UK faces a "sharp economic slowdown" this year as it raises interest rates to try to stem the pace of rising prices. »

Fed Set to Hike Interest Rates This Week

The Fed is expected to hike rates by half a percentage point at its meeting this week. Federal Reserve Chairman Jerome Powell said the central bank is determined to bring down inflation 'more quickly'. Andrew Ross Sorkin joins Morning Joe to discuss.

Bank of England Raises Interest Rates to 0.5%

THE GUARDIAN: Rise aims to combat soaring inflation despite faltering economic recovery from pandemic and deepening cost of living crisis

The Bank of England has raised interest rates to 0.5% to tackle soaring inflation amid intense pressure on households in Britain’s cost of living crisis. » | Richard Partington, Economics correspondent | Thursday, February 3, 2022

Prospect of Soaring Interest Rates Sends Markets into Frenzy

THE TIMES: Volatility is back. Some of the world’s stock markets are oscillating violently, none more so than Wall Street. On Monday, Tuesday and Wednesday this week, the Dow Jones industrial average experienced intra-day swings of 1,271 points, 1,046 points and 939 points, respectively — huge movements by any normal measure.

While the trend in share prices has been sharply down since New Year’s Day, it is the erratic and wildly fluctuating nature of stock markets that has really caught the eye. » | Patrick Hosking, Financial Editor | Saturday, January 29, 2022

Check out The Times special offer for new subscribers here.

Soaring US Inflation Prompts Fed to Hike Up Interest Rates | DW News

Jan 27, 2022 • The US Federal Reserve will begin raising interest rates in March. It's a departure from pandemic-era polices that have been in place since March, 2020, pegging the benchmark rate to zero. Fed Chairman Jerome Powell says the move is designed to temper economic growth. Americans have seen decades-high inflation rates lately, eating into wage gains and household budgets. The Fed Chairman added that he thinks there is quite a bit of room to raise rates "without threatening the labor market."

Fed Eyes 3 Rate Increases in 2022; Slows Stimulus as Prices Rise

THE NEW YORK TIMES: Federal Reserve officials suggested as many as three interest rate increases in 2022 as the economy heals and inflation persists.

“I think the risk of higher inflation has increased,” Jerome H. Powell, the Federal Reserve chair, said while testifying before Congress last month. | Sarahbeth Maney/The New York Times
Federal Reserve policymakers on Wednesday said they will cut back on their stimulus more quickly at a moment of rapid inflation and strong economic growth, capping a challenging year with a pronounced policy pivot that could usher in higher interest rates in 2022.

A policy statement and a fresh set of economic projections released by the central bank detailed a more rapid end to the monthly bond-buying that the Fed has been using throughout the pandemic to keep money chugging through markets and to bolster growth.

Officials are slashing their purchases by twice as much as they had announced last month, a pace that would put them on track to end the program altogether in March. That decision came “in light of inflation developments and the further improvement in the labor market,” according to the policy statement.

Fed Chair Jerome H. Powell, speaking at a news conference following the Fed’s meeting, said a “strengthening labor market and elevated inflation pressures” prompted the central bank to speed up the reductions in asset purchases. » | Jeanna Smialek | Wednesday, December 15, 2021

Bank of England’s Rate Decision Leaves Many Economists Gasping for Air

THE GUARDIAN: Analysis: decision to keep rates on hold is not unpopular but governor’s signalling is roundly criticised

The Bank expects the base rate to be 1% by the end of 2022. Photograph: Leon Neal/Getty
It is “compulsory for the Bank of England governor to be an unreliable boyfriend”, Andrew Bailey joked during a press conference to explain why the central bank he runs kept interest rates on hold when action of some kind was expected.

As quips go, it fell flat in financial markets, where currency traders sold the pound, knocking more than 1% from sterling’s value against the US dollar.

It also left many economists gasping for air as the full implications of Bailey’s refusal to turn up to his own party began to sink in. He had stressed last month that monetary policy “will have to act” if there is a risk of inflation. Those words were not followed by action on Thursday, despite the rising wages and prices.

Gerard Lyons, a former candidate for governor and a former adviser to Boris Johnson, described the governor’s signalling as “appalling”, adding that by not correcting how the market or the media interpreted his comments he encouraged “hawkish expectations ahead of this meeting that was not merited by the recent data”.

Lyons went on to say the bank needed to learn from the US Federal Reserve, “to be on top of the data” and “guide” the market. » | Phillip Inman | Thursday, November 4, 2021

Bank of England Will Have to Act to Curb Inflation, Says Bailey

THE GUARDIAN: Governor signals central bank is preparing to raise interest rates amid surge in energy prices

The Bank of England governor, Andrew Bailey, said he continued to believe the recent jump in inflation would be temporary. Photograph: Hannah McKay/Reuters
The governor of the Bank of England has warned it will “have to act” to curb rising inflation, sending a new signal that it is gearing up to raise interest rates.

Andrew Bailey said he continued to believe the recent jump in inflation would be temporary, but he predicted a surge in energy prices would push it higher and make its climb last longer, increasing the risk of higher inflation expectations.

“Monetary policy cannot solve supply-side problems – but it will have to act and must do so if we see a risk, particularly to medium-term inflation and to medium-term inflation expectations,” Bailey said on Sunday during an online panel discussion organised by the Group of 30 consultative group. » | Guardian staff and agency | Monday, October 18, 2021

Mark Carney and His Stupid ‘Forward Guidance’

The Irresponsible Bank of England Keeps Interest Rate Down At Record Low

Simon Rose of Save Our Savers, interviewed on Sky News after the Bank of England's MPC announced the 60th month of base rate at 0.5%.

BBC: UK interest rates kept at record low: UK interest rates have been held at 0.5% for another month, the Bank of England has said. » | Thursday, March 06, 2014

Mark Carney: No Need for an Immediate Rate Rise

Mark Carney, Canadian Governor of the Bank of England

THE DAILY TELEGRAPH: Bank of England governor seeks to reassure markets that interest rate rise is not imminent, saying he doesn't want to focus on one indicator

Bank of England Governor Mark Carney has pledged there will be no “immediate” increase in interest rates as unemployment nudges closer to the 7pc threshold in an apparent softening of his forward guidance policy.

He said Bank of England policymakers look at “overall conditions in the whole labour market”, rather than just one indicator, and that any change, when it comes, would be “very gradual”.

The governor, who said that the UK economy was "in a different place" to when he introduced the guidance, added: “We don’t see an immediate need to change monetary policy."

Asked if he would consider lowering the 7pc threshold, Mr Carney added: “There are a broad range of things we could do, I wouldn’t jump to that conclusion … we’re trying to get across is that it’s all about overall conditions in the labour market.

“We wouldn’t want to detract from that focus by unnecessarily focusing on one indicator.” » | Denise Roland | Thursday, January 23, 2014

My comment:

"No need for an immediate rise [in interest rates]" – Mark Carney

No, there is no need for him. He's sitting pretty with his huge salary and exorbitant expenses. The rest of us have to make ends meet from our savings. What a thoughtless, unreasonable man Carney is!

Never in my lifetime can I remember not being able to get interest on my capital that at least equates to the rate of inflation, and then some. Does this man have no sense of true capitalism? Does this man have no sense of economic history?

What an utter disappointment this Governor is! – © Mark

This comment appears here too.

Interest Rates Set to Rise as Economy Recovers
THE DAILY TELEGRAPH: Interest rates will start to rise sooner than expected after official figures showed the economy growing at its fastest rate for a decade, economists have said.

Growth over the past six months reached 2 per cent, the fastest pace of expansion over two consecutive quarters since 2000, according to the Office for National Statistics.

The economy received a further significant boost when Standard & Poor's, the ratings agency, revised its outlook on Britain from negative to stable and confirmed the country's AAA credit rating[.] >>> Andrew Porter and Philip Aldrick | Tuesday, October 26, 2010

THE DAILY TELEGRAPH: Greece reignites Europe debt woes: Europe's debt woes have returned to the fore after Greek premier George Papandreou threw open the door to fresh elections and vowed to liberate the nation from "slavery and surveillance". >>> Ambrose Evans-Pritchard | Tuesday, October 26, 2010

We have remarkable recessions and depressions these days. They used to last for years. Now, if we listen to the so-called specialists, they last for a mere few months! It seems like only yesterday that the UK economy was in danger of losing its AAA credit-rating. Now, its superb credit-rating is not in any doubt. Hmm! What is going on here? Surely Osborne's economic remedies cannot have kicked in yet. They have barely been announced. Methinks the people are being manipulated; methinks they are trying to pull the wool over our eyes. Hype it up, why don't you? – © Mark

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Bank of England to Raise Interest Rates
THE TELEGRAPH: The Bank of England is set to raise interest rates to their highest level in more than six years, a move that will further squeeze homeowners and consumers.

The bank's Monetary Policy Committee is widely expected to push interest rates to 5.75pc as Governor Mervyn King and his fellow policy makers seek to bring inflation back under control and cool the economy. Bank of England set to raise interest rates (more) By Richard Blackden

Mark Alexander