Ep. 235 Fed Hikes Rates To Feign Confidence
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Today the Federal Reserve raised interest rates for the third time in 10 years
Of course, the tightening cycle began with the first rate hike in December of 2015
Followed by the second rate hike in December of last year
And now, breaking from tradition, rather than waiting an entire year for the third hike
We got the hike in March
Of course the Fed had allowed market expectations to rise to 100% in anticipation of this rate hike
When the Fed raised rates for the first time they talked about raising rates for an awfully long time before they actually got around to doing it
Ironically, though, about 2 hours earlier than the rate hike announcement, the Atlanta Fed revised down again its projection for Q1 GDP to .9
Remember - at the beginning of February, not even 6 weeks ago, the Atlant Fed was at 3.4% for Q1 GDP
They're down to .9%! That is a huge collapse in estimates for economic growth in the first quarter
And I'm sure it portends ill for subsequent quarters
And remember - Janet Yellen has always said that the Federal Reserve is not on a preset course
And that rate hikes that they are forecasting will only happen to the extent that their economic forecast pans out
That all of their rosy expectations of economic recovery has come true
Yet none of it has come true
If anything, you've had a collapse in growth estimates since the last time the Fed met, yet
The collapse in GDP forecast has done nothing to alter the Fed's path, because they've ignored all the data
And they raised interest rates yet again
That doesn't mean that interest rates are high, I mean they're still very low
Remember, we're still not at a range between .75% and 1% so the average of that range, the midpoint, is still below 1%
1% was the emergency level that Alan Greenspan slashed rates to, after the dot com bubble bust and after the September 11 terrorist attack sent the U.S. economy into recession
At that point, in a recession, the lowest rates got was 1%
The Fed would have to hike rates again to get back up there

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