FED CHAIR POWELL JUST RAISED RATES BY .75%!
My fly has been delayed, but there is breaking news. The fed just announced powell just announced 75 basis, point hike, the largest since 1994. So powell is very, very, very serious about curbing inflation. Unfortunately, though, this announcement is now bring markets down. So since im here stuck at the airport lets talk about what was announced. This is right before his press conference, so maybe theres more. That will be said during the press conference, but basically, overall, summary has already been released. So lets take a look so, as you can see here, benchmark interest rate by three quarters of a point 75 base point the biggest increase since 1994.. Okay. So, besides this, what has changed well, according to this, the feds benchmark rate will end at 3.4 by year end. This is an upward revision of 1.5 Music that is huge, thats, a big jump thats, almost 50 percent higher. Also, the committee sees the rate rising to 3.8 percent in 2023, a full percentage point higher, so obviously, powell fomc and everyone else theyre very worried about the rising inflation and they want to put a stop to this. But with this comes economic slowness, which is why you could see here in 2022 now its anticipated that the uss uh gdp will only be up 1.7 down from 2.8 in march. So there is a cost theres. Definitely a big cost to raising rates. So much so fast right, its definitely going to slow down the economy.
It goes slow down, borrowing its going to increase mortgage rates and and lending rates. I mean theres a lot that comes with this now. What else is there? Well, if you look at this, this is based on the fact that uh inflation has gone up so much theres. Many different data points. For example, the the personal consumption expenditures rose to 5.2 percent right um and also cpi data that came out not too long ago. Like a couple weeks ago, went up to 8.6, so this is the reason why power has to be so aggressive, because every single data point thats measuring inflation is going in the wrong direction not coming down, but overall going up. Now we continue to read this article. What else does he say? Well, basically, the statement says that job gains has still has still been robust in recent months. Unemployment is still low, so these are things that he has mentioned in previous press releases or conferences, hes, not afraid of raising rates right now, because because um, the job market is still good according to pow, unemployment is still at a 40 year low. I think its like 3.4, something like that there are still 1.9 open jobs for very unemployment person right so because of the labor force. Still acting strong powell seems to think that going very, very, very hard with rate hikes is safe and its more important to bring rates down. You know than than worry about the stock market and worry about economic slowness.
At this point now, moving on the long term, the committee outlook for policy larger matches, market projections and the fund rate to be about 3.8 percent, the highest level since 2007. Right and guess what happened at uh thats when the housing bubble happened and uh, and we had you know some not so good years, right, um going through anything else. Um, the post meeting statement removed the long used phrase indicating that fomc expects inflation to return to two percent objective ouch. So normally what the fed wants to see is inflation hover around two percent and ive heard two to three percent, but they have removed that, which means they no longer expect. That is realistic that we may be hovering. Even with all these rate hikes, we may be hovering. I dont know at three four five percent, so no longer they no longer expect two percent anymore, so that thats not good that thats uh thats, actually really really not not good at all and uh. You know going down anything else: yeah consumer price index cpi went up 8.6. I already mentioned that the job market uh ‘0 000 gain is the lowest since april of 2021, which you know we we uh, we experienced a pretty bad crypto drop right around then um and then going through thats about it thats it. That was the statement. We have a 75 basis point hike to look forward to that is coming, but what about next? What about next month? What about the meeting afterwards? We dont know at this point, but obviously this is a drastic shift from what was announced before and well see.
If more comes out of this meeting um that powell is about to have in terms of what may be coming in and well see what he said during the q, a but overall its better than having 100 basis point height thats. What some were predicting 75 base point is above expectations, and the market is definitely reacting to it um, but i think people will well will be keen on what he says during this press conference, all right guys. That is, it just want to cover this real, quick.