Fed raises interest rates modestly, plans seven rate hikes in total this year

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Fed raises interest rates modestly, plans seven rate hikes in total this year

The Federal Reserve raised interest rates by a quarter percentage point on Wednesday, and signaled far more rate hikes, a total of seven for this year, marking a big first step in the Fed’s precarious fight to rein in the highest inflation in 40 years.

Fed leaders also acknowledged that inflation will remain high through the end of the year, hitting 4.3 percent, using the Fed’s preferred gauge, according to a new round of projections released Wednesday at the end of the Fed’s two-day policy meeting. The new estimates for seven hikes is more than double the number penciled in when policymakers last released projections in December.
 
It is all nonsense The Fed is behind the market. As long as the Fed is in quantitative mode by buying US bonds to keep interest low , it has an inflationary bias. 25 basis point raise is meaningless when inflation is 10%.
 
MKTrader said:
Fed raising rates 7 times is about as likely as 75% of ET becoming trading millionaires by the end of the year.
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Fed Fund futures have priced in 7 rate hikes for 2022 apparently. So you can make some easy money betting against it
 
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What a sequence (?),

China > Russia > US
Covi -
China > Global
2008
US > Global

(and ofcourse each one could be divided into smaller steps/regions)

Maybe there's a pattern. Just interesting. Then again, kinda worthless.
 
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Millionaire said:
I thought the Fed ended QE this month, is that no longer the case?
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I think the schedule originally called for ending in late March. Traditionally, when there was a reserve requirement for commercial banks, Fed bond sales would net greater than Fed bond purchases* in order to net drain reserves and force the competitive overnight funds rate up. Today, however, I believe the Fed has eliminated a specific reserve requirement and is, I believe, now paying interest on reserves. If I am correct, if not someone will be happy to jump in and correct me, the Fed can therefore target the funds rate simply by setting the interest rate they will pay on reserves, as no bank will lend to another at a lower rate. In addition the Fed could affect the range of overnight rates by bond sales which would reduce reserves and put upward pressure on the overnight rate thus widening the range above the minimum set by the Fed, or use bond purchases which would increase reserves and narrow the target range down to the minimum set. You may recall that during Bernanke QE, Bank reserves became swollen to the point that the funds rate plummeted toward zero. Bernanke put a floor under it by paying a very small interest on excess reserves.
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*The Fed Bond Desk transacts via the secondary market, so that transactions will register in bank reserve accounts, and not directly with the Treasury.
 
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