27 July 2022

As Expected

The Federal Reserve has raised its benchmark Federal Funds Rate by 75 basis points (¾%)

Given that gas prices have come down almost a dollar in the past month, I do wonder how much of this significant hike is from inflationary concerns, and how much is their attempting to get away from the zero bound.

Basically, you cannot lower interest rates below 0% for stimulus, and it has been at or near that since 2008, meaning that the Fed has been pushing on a string, a state of affairs that reduces the Fed's power and makes fiscal, rather than monetary policy more appealing.

Changing this serves to move power over the economy back to the Federal reserve.


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