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The Fed raises interest rates by 75 points. Such aggressiveness has not been seen for 28 years – Monetary Policy

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The Fed raises interest rates by 75 points.  Such aggressiveness has not been seen for 28 years - Monetary Policy

The US Federal Reserve raised the federal funds rate by 75 basis points, which thus moves into a range of 1.5% to 1.75%.

The US central bank began a cycle of raising key interest rates in March last year, increasing them by 25 basis points. At the next meeting in May, it increased even more: by 50 basis points. At the time, he ruled out the option of a 75-point increase, and the consensus pointed to two more increases, 50 basis points each, at the June and July meetings.

It turns out that since the end of last week, bets began to rise that the Fed could go 75 basis points to try to contain inflation – which in May unexpectedly updated the maximum of the last 40 years (at 8.6%). , as the peak is estimated to have passed.

This is exactly what happened, making it the biggest increase since 1994.

In addition, the Fed has signaled that it will continue to raise interest rates this year at the fastest rate in decades, while trying to slow the economy and fight inflation.

Central bank governor Jerome Powell has already said that the Fed may raise interest rates at every meeting this year, but the size is larger than originally expected.

However, the scatter plot – a map showing how each central banker views interest rate changes – points to a 50 basis point increase in interest rates at all other Fed meetings this year, that is, in July, September, November and December. .

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According to the scatter plot, the Fed points to a discount rate of 3.4% at the end of 2022, 3.8% at the end of 2023 and 3.4% at the end of 2024.

However, the Federal Reserve changed the reference to the 2% inflation target from “expected” to “mandatory”.

Powell has already spoken at the usual press conference after the announcement of the monetary policy decision and stressed that inflation is too high and that there is a tendency for inflationary pressures to increase further.

The Fed chairman said a 75 basis point increase should not be the norm, but he did not rule out such a possibility at the July meeting (pointing to a 50 or 75 basis point increase at that meeting).

Jerome Powell also said that after the likely hike in key interest rates, the federal funds rate should also move to a more normal basis at the next meeting, which will allow central banks to consider the necessary measures from there.

The rise and fall of interest rates in recent years

After about seven years of no change in interest rates (they were cut in December 2008), which remained at historical lows between 0% and 0.25%, the Federal Reserve raised interest rates nine times between the end of 2015 and December 2018 .

The Fed made its first hike (by 25 basis points) in December 2015 and then raised the discount rate again by 25 basis points in December 2016. This was followed by three more increases of 25 basis points in 2017 and four more increases in 2018.

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However, in July 2019, he made his first cut since December 2008. That is, after 10 and a half years, he returned to the policy of stimulating the economy, at the moment of deceleration.

Powell said this 25 basis point cut in the federal funds rate in July would not be the beginning of a long cycle of cuts. But in September of that year, interest rates fell again, and this happened again at the October monetary policy meeting when they returned to the 0% to 0.25% range. And so it continued until March of this year, when a new cycle of ascents began.

(news updated at 20:16)

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Economy

Starting from this environment, there are 11 more mandatory pieces of equipment in the car.

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Starting from this environment, there are 11 more mandatory pieces of equipment in the car.

On July 6, 2022, a rule will come into effect requiring all new vehicles sold in the European Union to include new safety systems in the list of standard equipment 11.

The rule applies to all new models released for sale, and for models already on sale, a two-year adaptation period is provided.

What systems will become mandatory?

The European Union wants to reduce the number of fatal accidents in Europe, so it will oblige all car manufacturers to install a wide variety of safety equipment. Some of them are already included in the list of series of many models.

Here is the full complete list:

-Autonomous emergency braking
– Fatigue and distraction detection system
– Pre-installation of the ignition blocker breathalyzer
– Warning triangle
-Recording data in case of an accident
-Updated frontal crash test across the entire width of the car; improved seat belts
-Increased head impact area for pedestrians and cyclists; safety glass
– Smart speed assistant
– Track maintenance assistant
– Passenger Protection: Pole Collision
– Rear camera or detection system

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Economy

Bargain hunters bring profit to Europe. Oil continues to fall – markets in a minute

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Bargain hunters bring profit to Europe.  Oil continues to fall - markets in a minute

Gold recovers very weakly. Euro awaits fire test

Gold remains near six-month lows under pressure from a rally in the dollar, which currently acts as a safe haven, at a time when investors fear a recession and see the US Federal Reserve (Fed) tighten monetary policy.

The yellow metal rose 0.21% to $1,768.51 an ounce, but remained very close to its December 15 low of $1,764.07 last year. In turn, the Bloomberg Dollar Index, which compares the strength of the green note against 10 competing currencies, is at its March 2020 highs, trading at the waterline (0.03%) to 106.48.

“Gold seems to be in second place against the dollar,” Gavin Wendt said in an interview with Bloomberg. A senior analyst at MineLife explains that “gold has performed well this year, but the recent gains in the dollar have had a negative impact on gold, which is priced in dollars.”

This Wednesday, investors will be keeping a close eye on the release of the minutes of the latest Fed meeting as the market looks for clues that the central bank may raise its key interest rate from 50 basis points to 75 basis points next month. The meeting is scheduled for July 26 and 27.

In the Eurozone, the single currency is at the waterline against the dollar (0.07%) at $1.026, but remains at a 20-year low against the green note. The euro-dollar pair will be put to the test this week as analysts believe it’s only a matter of time before the euro equals the dollar, with some even acknowledging that the single currency could be worth less than the dollar.

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“It’s only a matter of time before the euro reaches parity with the dollar,” Neil Jones, head of foreign exchange at Mizuho, ​​said in defense, quoted by Bloomberg. Mario Martins, analyst at ActivTrades, goes further and even admits in statements to Negosios that “it is absolutely possible for the euro to be worth less than the dollar. It’s not an absolute case because it hasn’t happened yet, but it’s almost inevitable at the moment. Very possibly this week.”

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Fines? From now on it will be easier to keep the speed limit

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Fines?  From now on it will be easier to keep the speed limit

HAlmost 600,000 speed violations were reported in Portugal last year. A high number, which, however, is found not only in our country. That is why the European Union wanted to take action and apply in directive 2019/2144 – effective this Wednesday – a commitment for all new vehicles that are sold to be equipped with Intelligent Speed ​​Assistance (ISA).

It should be noted that this European Union standard will apply to vehicles of categories M (at least four wheels and carrying passengers) and N (at least four wheels and carrying goods and goods).

The function of this ISA system is to warn the driver of the speed limit in the lane in which he is driving. This will allow the driver to be more aware of the speed at which he is allowed to drive, although this system is for information only. ISA has no intervention features.

“The ISA system can rely on various input methods such as camera surveillance, map data, and machine learning. However, the actual presence of explicit numerical speed limit signs should always take precedence over any other information on board.

Recall that the European body aims to reduce the number of collisions by about 30% and deaths due to road traffic accidents by 20%.

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