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Central bank lifts interest rates, forecasts two more hikes in 2019 (1 Viewer)

Phys251

Purge evil with Justice
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https://www.usatoday.com/story/money/2018/12/19/fed-decision-interest-rates/2306246002/

Downgrading its economic outlook, the Federal Reserve raised its key interest rate Wednesday for a fourth time this year but lowered its forecast to two hikes in 2019 amid the recent stock market selloff and uncertain growth prospects.

As expected, the Fed raised the federal funds rate -- which is what banks charge each other for overnight loans – by a quarter point to a range of 2.25 percent to 2.5 percent.

But in a statement after a two-day meeting, the Fed newly acknowledged a slowdown in global economic growth, the stock market’s plunge and a strong dollar that’s making U.S. exports more expensive for overseas customers.

The Federal Reserve sees stormy skies ahead, too. Let the discussion begin as to what's causing them.
 
Periodic reminder:

Trump replaced Janet Yellen, a dovish Federal Reserve chief (whose policies he liked), with hawkish Jerome Powell, whose policies he dislikes. Rates have gone higher, and it is the proximate result of the president’s appointment.

There is no one else to blame for this mistake but the president. Powell’s leanings were well known; so too were those of Trump’s appointment for vice chairman, Richard Clarida.

This self-inflicted error is perplexing: When Trump was running for office, he berated Yellen, saying she “should be ashamed that rates were so low.” We have since found out that he did not re-appoint Yellen because he felt that, at 5-foot, 3-inches, she was “too short” to run the central bank. This has to be one of the great unforced mistakes in the postwar history of U.S. monetary policy.
 
The fed either has complete blinders on and ignoring the warning signs are by raising interest rates the economy is not near a recession the many bears and doom and gloomers have been predicting.

What?

I agreed with the past rate hikes by Powell, but given the yield curve right now I would have waited for at least the next meeting to raise them, keeping the rate the same at this time
 
My thoughts:

1] Trump backed the Fed in a corner, where they had to raise rates. Otherwise, the markets would panic.

2] I'm not sure I see more hikes coming.
 
https://www.usatoday.com/story/money/2018/12/19/fed-decision-interest-rates/2306246002/





The Federal Reserve sees stormy skies ahead, too. Let the discussion begin as to what's causing them.

"But in a statement after a two-day meeting, the Fed newly acknowledged a slowdown in global economic growth, the stock market’s plunge and a strong dollar that’s making U.S. exports more expensive for overseas customers. "

And the stock market drops over 300 points minutes after the decision. (not that it really matters)

It makes a person wonder what Powell cares about...the US economy? Or the global economy?
 
Via tweets, Trump is positioning the Fed as the scapegoat for any economy woes leading up to the 2020 election.
 
It makes a person wonder what Powell cares about...the US economy? Or the global economy?

Careful, comrade, questioning a Trump appointment might get you tagged as an enemy of the people.
 
Careful, comrade, questioning a Trump appointment might get you tagged as an enemy of the people.

I've never said Trump was perfect.

Heck, maybe Powell fed Trump a line of BS and Trump was stupid enough to believe him.

But what's important is what Powell is doing to stifle the US economy.
 
I've never said Trump was perfect.

Heck, maybe Powell fed Trump a line of BS and Trump was stupid enough to believe him.

But what's important is what Powell is doing to stifle the US economy.

He was putting interest rates to neutral, (Not stimulative) as any time interest rates are below the rate of inflation it is stimulative to the economy, a potential source for inflation to take off. One of the major mandates for the Fed is to control inflation. To note even with the hike the fed funds rate is low by long term historical standards
 
Via tweets, Trump is positioning the Fed as the scapegoat for any economy woes leading up to the 2020 election.
It's never his fault.

Even though a bunch of it is, through his inability/unwillingness to understand and make decisions, rather than going with his clearly idiotic gut reaction.
 
What?

I agreed with the past rate hikes by Powell, but given the yield curve right now I would have waited for at least the next meeting to raise them, keeping the rate the same at this time

By keeping rates the same that would have been a troubling sign we are headed into a recession. You only do that when the economy is struggling.
 
Via tweets, Trump is positioning the Fed as the scapegoat for any economy woes leading up to the 2020 election.

Half of the Americans voters have no idea who Jerome Powell is.

When people either attack or praise Obama's presidency, I doub the name ben bernanke is mentioned much.
 
"But in a statement after a two-day meeting, the Fed newly acknowledged a slowdown in global economic growth, the stock market’s plunge and a strong dollar that’s making U.S. exports more expensive for overseas customers. "

And the stock market drops over 300 points minutes after the decision. (not that it really matters)

It makes a person wonder what Powell cares about...the US economy? Or the global economy?

There is no inflation. keeping the rates flat would have been a giant red flag.
 
We didn't do enough to fix the last big event, so here we are again about 10 years later.

....only this time we have an arrogant, ignorant impulsive man in the White House. He is not known to listen to his advisors, just to his large gut. If we have an economic problem, I have no confidence in Trump's ability to move us through it without damage.
 

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