Inflation/fed funds rate

[Zoe]

Looks like Federal Reserve Bank may raise the fed funds borrowing rate to banks in order to slow money supply due to inflation. Trump hired a new federal reserve bank chairman because the old one would not cut fed funds rate.

Federal Reserve Bank has no choice but to raise the Fed Funds rate due to inflation Trump has created.

 

[Fernando]

FED has no choice but will hold it steady until November election. Expect inflation to continue and high mortgages.

 

[Zoe]

FED has no choice but will hold it steady until November election. Expect inflation to continue and high mortgages.

Yeah. It impacts credit cards and like personal loans more directly like car loans. It kinda hurts appraisal business because many people have like 2-3% mortgage rates. I will not help lower long term mortgage rates. Inflation won't lower commercial lending rates because many times they are tied directly to the fed funds borrowing rate. Many commercial loans are on a floating rate with fed funds rate. 2 or 3 % over the fed funds rate or more.

Our govt is paying over a trillion a year in interest on 40 trillion in debt.

 

[Zoe]

Sometimes commercial loans are on rate lock for various terms. Like 1 year, 2 year, 5 year, etc rate lock. So any renewing this year will likely be at higher interest rate than they had. If they were 1 year ago, maybe not but if they were 5 or 10 year rate lock based on fed funds borrowing rate, their interest rate is likely going to rise. Helps shrink the money supply and inflation.

The FED Reserve Bank has to be careful and balance with employment because they don't want a depression. The last employment rate numbers were not impressive so they are likely stay still a little bit.

 

[Fernando]

MSN

Warsh takes hawkish turn with rate rise and hints of more to come​

Investors have been betting the Federal Reserve is at the start of a series of interest-rate increases. On Wednesday, Chairman Kevin Warsh gave them little reason to think otherwise.

The Fed raised rates for the first time in three years, and officials penciled in at least one more increase this year. Warsh said the quarter-point move “removed a dose of accommodation.” In central-bank parlance, accommodation means stimulus, so the phrase suggested officials don’t think rates are restraining the economy even after lifting them.

Warsh also listed geopolitics—a euphemism for the Iran war and the energy shock it has caused—among three developments since July that led to Wednesday’s decision. “There’s no hiding from hot spots around the world,” he said. Officials had changed their judgment about how those conflicts were likely to unfold, suggesting they no longer see the energy shock as a disruption to wait out, he said.

“If you don’t even think you’re restrictive and oil isn’t going anywhere, you’ve got some work to do,” said Michael Gapen, chief U.S. economist at Morgan Stanley. After the meeting, he revised his forecast to anticipate a total of three rate increases, including Wednesday’s, up from two. The yield on the 2-year Treasury note, which is highly sensitive to expectations for Fed rates, rose to its highest level in more than two years.

 

[Fernando]

MSN

Trump lashes out at Fed after first interest rate hike in 3 years​

President Donald Trump on Wednesday slammed the Federal Reserve after the central bank raised its benchmark rate for the first time in more than three years with a nonsensical rant in which he lectured the bank on how to run monetary policy, insisting interest rates "should be 1%, or less," hours

"Interest Rates in the United States should be 1%, or less, because we are the Best Credit in the World — BY FAR," Trump wrote. "Our Country is BOOMING with new Investment! If we stopped Trading with every country that we have a Deficit with, which is most of them, we would make, at least, 1.5 Trillion Dollars a year. The word 'Deficit' is nothing more than a fancy word for LOSS. We are 'carrying' almost every country in the World, and that cannot go on any longer. LOWER THE INTEREST RATES FOR THE UNITED STATES OF AMERICA, AND FAST!"

And despite the president’s boast that the United States has the "Best Credit in the World," bond investors’ demand for U.S. government debt is going the opposite direction Trump wants, with the yield on 10-year Treasuries topping 5 percent this week.

 

[Charles West]

MSN

Trump lashes out at Fed after first interest rate hike in 3 years​

President Donald Trump on Wednesday slammed the Federal Reserve after the central bank raised its benchmark rate for the first time in more than three years with a nonsensical rant in which he lectured the bank on how to run monetary policy, insisting interest rates "should be 1%, or less," hours

"Interest Rates in the United States should be 1%, or less, because we are the Best Credit in the World — BY FAR," Trump wrote. "Our Country is BOOMING with new Investment! If we stopped Trading with every country that we have a Deficit with, which is most of them, we would make, at least, 1.5 Trillion Dollars a year. The word 'Deficit' is nothing more than a fancy word for LOSS. We are 'carrying' almost every country in the World, and that cannot go on any longer. LOWER THE INTEREST RATES FOR THE UNITED STATES OF AMERICA, AND FAST!"

And despite the president’s boast that the United States has the "Best Credit in the World," bond investors’ demand for U.S. government debt is going the opposite direction Trump wants, with the yield on 10-year Treasuries topping 5 percent this week.

Where do these stories that verge on fantasy come from? He didn't lash out at anybody, for Pete's sake.

 

[Fernando]

Where do these stories that verge on fantasy come from? He didn't lash out at anybody, for Pete's sake.

Just because Trump didn't go ballistic and resort to his usual name calling and threaten Walsh, MAGAs don't see it as lash out.
Trump picked Walsh and he doesn't like to be wrong in his choices.
Trump did criticize Walsh and be interesting what Trump will say next time. FED is expected to raise interest rates again. Inflation is still too high.

 

[Zoe]

We will see how jobs reports go and inflation rate before next Fed meeting at end of October. I think it is Oct27th. The new chairman knows Trump wants 1% fed funds rate. But he aint king. The board obviously voted to raise the rate due to inflation.

 

[Fernando]

We will see how jobs reports go and inflation rate before next Fed meeting at end of October. I think it is Oct27th. The new chairman knows Trump wants 1% fed funds rate. But he aint king. The board obviously voted to raise the rate due to inflation.

10 Year T bonds today is highest since 2007. The high interest rate is due to expectation of high inflation. FED has no choice but to raise rate next month.
The high rates do have a benefit for me. US Dollar becomes stronger thus currency benefits me when I go overseas soon.