We all knew that something big was coming to the American economy in the coming days, largely due to the inability of the White house to properly adapt to the global fiscal situation, but we perhaps weren’t expecting something as dramatic as we’ve seen this week.
With inflation still spiraling out of control, the Biden administration needs all of the help that they can get…even if it means allowing the Federal Reserve to make historic decisions.
The Federal Reserve on Wednesday launched its biggest broadside yet against inflation, raising benchmark interest rates three-quarters of a percentage point in a move that equates to the most aggressive hike since 1994.
Ending weeks of speculation, the rate-setting Federal Open Market Committee took the level of its benchmark funds rate to a range of 1.5%-1.75%, the highest since just before the Covid pandemic began in March 2020.
Stocks were volatile after the decision but turned higher as Fed Chairman Jerome Powell spoke in his post-meeting news conference.
The decision did not come lightly.
“Clearly, today’s 75 basis point increase is an unusually large one, and I do not expect moves of this size to be common,” Powell said. He added, though, that he expects the July meeting to see an increase of 50 or 75 basis points. He said decisions will be made “meeting by meeting” and the Fed will “continue to communicate our intentions as clearly as we can.”
The move provided a small bump for the stock market when it was announced, but it wont’ likely be enough to stave off the next wave of this slow-mo recession.
