The Federal Reserve finds itself in an increasingly precarious situation as they take action to correct historic rates of inflation caused by Joe Biden’s fiscal policies.
While the Biden administration passes the blame to Vladimir Putin for America’s skyrocketing inflation, no one can seem to explain how the Russian President is to blame for printing $5 trillion during a pandemic when interest rates were zero.
Following a two-day meeting, the Federal Open Market Committee announced Wednesday that it would increase its interest rate target by three-quarters of a percentage point, to a range of 1.5% to 1.75%. The central bank typically raises rates by just a quarter of a percentage point, so the move signals that the Fed is now scrambling to drive down prices.
While raising rates depresses demand and should cause the rate of inflation to decrease, it also slows spending. Many economists fear that the Fed’s more aggressive course of action will knock the economy into a recession.
The drastic move comes just days after May’s consumer price index report came in hotter than expected and showed prices increased by 8.6% on an annual basis, the fastest clip since 1981 during the Great Inflation that helped sweep President Ronald Reagan into office.
All parts of the economy are facing price pressures, but energy prices and food prices, in particular, have exploded over the past several months, hurting consumers by making staples such as gas and groceries increasingly less affordable.
Inflation just hit a NEW 40-year high.
Overall CPI: +8.6% since last year
Fuel Oil: +106.7%
Meat, Poultry, & Fish: +13.1%
Used Cars: +16.1%
Airline Fares: +37.8%
Real Average Hourly Earnings: -3%
— Jacki Kotkiewicz (@jackikotkiewicz) June 10, 2022
Prior to Friday’s report, it was nearly unanimously believed that the central bank would conduct a half-percentage-point hike, as it did at its May meeting, but the report clearly caused Federal Open Market Committee members to reconsider how aggressive they need to be to tame the inflationary plague.
The Fed hasn’t increased interest rates at this level since 1994.
The high rate of inflation has severely damaged Joe Biden and the Democrats politically. American consumers can track the exact moment our economy began to tank, which just so happens to coincide with Biden’s presidency
Central bank officials also indicated in projections released Wednesday that they expect to increase the degree of rate hikes in the coming months in response to the hotter-than-anticipated inflation. The Fed’s benchmark rate will end this year at 3.4%, the projections suggest, a much faster pace of tightening than previously expected.
The officials also raised their projections for inflation. The median Fed official now sees inflation at 5.2% by the end of the year, compared to a March projection of 4.3%. Inflation projections remained about the same for both 2023 and 2024.
The Fed also upped its forecast for the unemployment rate in the coming months and years. It now predicts the unemployment rate will tick up to 3.7% by the end of the year and 4.1% by 2024, a sign that the central bank may be acknowledging the effect its aggressive tightening will have on the economy.
Let’s break this down:
The Federal Reserve just raised interest rates to combat Bidenflation. The rate hike will cause a massive devaluation of the U.S. dollar, which weakens America’s consumer power. Additionally, unemployment is expected to rise as a result, and a full-blown recession is likely to stem from the sum of all these parts.
Let’s Go, Brandon!
Author: Vasily Ivanov