{"id":62906,"date":"2022-06-16T07:39:10","date_gmt":"2022-06-16T12:39:10","guid":{"rendered":"https:\/\/olduvai.ca\/?p=62906"},"modified":"2022-06-16T07:39:10","modified_gmt":"2022-06-16T12:39:10","slug":"the-fed-is-winging-it-a-75-basis-point-hike-seemed-like-the-right-thing","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=62906","title":{"rendered":"The Fed Is Winging It: A 75 Basis-Point Hike “Seemed Like the Right Thing”"},"content":{"rendered":"

The Fed Is Winging It: A 75 Basis-Point Hike “Seemed Like the Right Thing”<\/a><\/h3>\n
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\"powell\"<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n
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The Federal Reserve\u2019s Federal Open Market Committee (FOMC)\u00a0today announced<\/a>\u00a0an increase of 75 basis points to the target federal funds rate, raising the rate to 1.75% from 1%. June\u2019s meeting today was the third meeting this year at which the FOMC has raised rates. Coming into the March meeting this year, however, the FOMC had not raised the target rate since March of 2020, even though price inflation began to accelerate during the second half of 2021.<\/p>\n

\"fomc\"<\/a><\/div>\n

Today\u2019s 75-basis-point increase is the largest increase since late 1994 when the FOMC raised the target rate from 4.75% to 5.5%.<\/p>\n

Notably, however, this increase comes mere weeks after the Fed Chair Powell slapped down the idea of a 75-basis point increase in June.\u00a0As reported by\u00a0Reuters on May 4<\/a>, Powell had insisted\u00a0“A 75 basis point increase is not something that the committee is actively considering.”<\/p>\n

That didn\u2019t last long.<\/p>\n

The fact that the Fed was forced to hike the target rate by higher than it had suggested was even\u00a0possible<\/em>\u00a0earlier in the year is a reminder that the Fed and its economists are simply in a reactionary mode when it comes to the US economy\u2019s problem with mounting\u00a0price inflation.<\/p>\n

\"fomc\"<\/a><\/div>\n

As even Powell admitted during today\u2019s press conference, the Fed was\u00a0surprised<\/em>\u00a0by how high price inflation has grown. The Fed then had to pivot in order to answer calls that the central bank \u201cdo something\u201d about price inflation.<\/p>\n

But when it comes to the Fed\u2019s decisions about setting target rates, it is I increasingly obvious there is no model. The \u201cplan,\u201d to the extent one\u00a0exists at all, amounts to \u201clet\u2019s see how bad inflation is, and then we\u2019ll pick a target rate and hope that solves the problem.\u201d<\/p>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The Fed Is Winging It: A 75 Basis-Point Hike “Seemed Like the Right Thing” The Federal Reserve\u2019s Federal Open Market Committee (FOMC)\u00a0today announced\u00a0an increase of 75 basis points to the target federal funds rate, raising the rate to 1.75% from 1%. June\u2019s meeting today was the third meeting this year at which the FOMC has […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[303,431,16888,534,13351,8701,8625,14776,25781,3650],"class_list":["post-62906","post","type-post","status-publish","format-standard","hentry","category-economics","tag-fed","tag-interest-rates","tag-jerome-powell","tag-monetary-policy","tag-price-inflation","tag-qt","tag-quantitative-tightening","tag-ryan-mcmaken","tag-the-mises-institute","tag-us-federal-reserve"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/62906","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=62906"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/62906\/revisions"}],"predecessor-version":[{"id":62907,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/62906\/revisions\/62907"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=62906"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=62906"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=62906"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}