Once again, the Federal Reserve has raised its benchmark interest rate by 75 basis points (¾%).
The Fed Funds rate has gone from basically 0% to 4% since March.
The Fed is trying to reduce inflationary pressures by creating unemployment to drive wages down, which is a roundabout way to fix things, given that the drivers of inflation are supply chain issues, monopoly rents, international political disruption of energy supplies, and (in the case of rents) parasitic speculation by hedge and private equity funds in real estate.
The Fed is doing this because it's the only tool that it has, and because it's anti-worker:
The Federal Reserve lifted interest rates by another 0.75 percentage point to combat inflation and signaled plans to keep raising them, possibly in smaller increments but to higher levels than previously anticipated.
The increase approved Wednesday, the Fed’s fourth consecutive 0.75-point rate rise, lifts the central bank’s benchmark federal-funds to a range between 3.75% and 4%. After the decision, Chairman Jerome Powell said officials would contemplate a smaller hike at their next meeting in December. But he cautioned that they might raise borrowing costs next year more than they have projected.
………
At their September policy meeting, most Fed officials projected that they would need to raise the benchmark rate to around 4.6% early next year. Officials didn’t release new rate projections Wednesday. Mr. Powell said that if they had, they would have been higher given recent strength in the labor market and high inflation readings. A higher path for interest rates suggests a greater risk of a recession, he said.
The Federal Reserve raising rates is a blunt tool to address this, but they could, at least in the case of real estate, address the ease with which speculators get credit to drive prices up, but because the Fed is run by bankers, and for bankers, they won't do this.
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