This would also probably be just another wrong projection, but it wouldn't hurt to save and HODL Bitcoin.
Topic: The precondition for knowing when the Federal Reserve stops raising rates (Read 243 times)
September 11, 2023, 04:52:56 AM
If you're in the United States, It's probably best to start saving the most of what you can save from you salary and control/stop purchases for things that you don't need. When unemployment rapidly rises, it usually leads to a recession. The other problem, is high inflation. Recession + High Inflation = Stagflation. If true, then you probably need to hold some of your savings in a Store of Value asset.
This would also probably be just another wrong projection, but it wouldn't hurt to save and HODL Bitcoin.
This would also probably be just another wrong projection, but it wouldn't hurt to save and HODL Bitcoin.
August 02, 2023, 02:10:57 AM
As inflation has fallen to 3%, the period of rate hikes should end very soon. Yes, a 0.25% rate hike is now possible, but the Fed could make a surprise move by announcing a pause. In fact, they're talking about 2% - but it's not really 2%, right? So expect some surprises in the near future
Look at the blue line in the charts in OP. There never truly was a fall in inflation until a phase of high unemployment has already happened. Unemployment has currently remained very low, then that means demand is still right their in the U.S. economy, which could mean re-inflation if the Federal Reserve starts pausing rate hikes.
Plus to those people who believe that the U.S. will escape a recession, read Fitch's downgrade, https://www.fitchratings.com/research/sovereigns/fitch-downgrades-united-states-long-term-ratings-to-aa-from-aaa-outlook-stable-01-08-2023
That's a symptom of financial deterioration, and the effect of the U.S. government's debt burden.
July 12, 2023, 02:15:12 PM
As inflation has fallen to 3%, the period of rate hikes should end very soon. Yes, a 0.25% rate hike is now possible, but the Fed could make a surprise move by announcing a pause. In fact, they're talking about 2% - but it's not really 2%, right? So expect some surprises in the near future
July 11, 2023, 09:55:04 AM
I don't think Powell wishes to break things to bring the inflation down, with him not getting the desired results this present a big dilemma for both the FED and the Government, it is not a good sign knowing fully well that the election is coming, if the economy is not doing well what are they going to use to campaign, but the job of the FED is to make sure they have the monetary system under full control. I have a feeling they are going to raise the interest rate by 0.25%, the last time I checked there is 85% chance of this happening before the next quarter and with rumour of Ukraine-Russia war coming to an end we are likely to inflation coming down and likely doge recession
I believe no one wants to break the economy to bring inflation down, but the same as the other economic events when inflation went high, causing a recession through monetary policy was necessary to curb demand and bring inflation down. It's something like an economic reset to flush the economy of excess money in circulation. Smaller money supply = smaller economy, then it rebuilds and grows again as the Federal Reserve expands the money supply through QE.
If Powell refuses to tighten and just leave inflation to be always high, then inflation will cause a recession for him as it slowly exhausts the people's savings until they are left with none. That would be a worse kind of recession because inflation is still high = Stagflation. But it won't end in Stagflation because Powell still needs to curb inflation. If he tightens during a time when people don't have any savings, then that could cause the worse economic condition = Depression. It would he harder to rebuild from such a condition. It's better to cause a recession now while the people still have their savings.
July 11, 2023, 08:30:36 AM
Yes they will raise rates and they want moderate unemployment and not high unemployment. We get high unemployment and they will have to cut rates to stimulate economy and we will repeat this entire cycle in a few years and this time we will get double digit inflation and bread will cost $10 a loaf. This is not the answer.
We need employment to slow down so we can get some stability in inflation which we don’t have now.
Inflation will bottom next month and then it’ll keep going up and most likely end at 4-5% which is nowhere near 2% target.
We need employment to slow down so we can get some stability in inflation which we don’t have now.
Inflation will bottom next month and then it’ll keep going up and most likely end at 4-5% which is nowhere near 2% target.
Increasing the unemployment rate by raising interest rates will certainly not be a correct solution. Although the households will spend less in case of an increase in the unemployment rate, the production problems and insufficiency that may occur due to unemployment will also cause the households to spend more. In addition, if the unemployment rate increases people will only spend more limitedly and will not avoid paying a price above their value for the products they need.
Although inflation seems to be under control now compared to last year, I think it has not reached a completely controllable level. For this reason, it will be very difficult to achieve the 2% target set in the short-term period. Is the base effect or is it a different reason that you think that the inflation rate will decrease next month?
July 10, 2023, 10:31:31 PM
Yes they will raise rates and they want moderate unemployment and not high unemployment. We get high unemployment and they will have to cut rates to stimulate economy and we will repeat this entire cycle in a few years and this time we will get double digit inflation and bread will cost $10 a loaf. This is not the answer.
We need employment to slow down so we can get some stability in inflation which we don’t have now.
Inflation will bottom next month and then it’ll keep going up and most likely end at 4-5% which is nowhere near 2% target.
We need employment to slow down so we can get some stability in inflation which we don’t have now.
Inflation will bottom next month and then it’ll keep going up and most likely end at 4-5% which is nowhere near 2% target.
July 10, 2023, 07:59:33 PM
I don't think Powell wishes to break things to bring the inflation down, with him not getting the desired results this present a big dilemma for both the FED and the Government,
They tried to increase rates but you can't stop inflation when you're adding to the existing supply, when increase in supply is the main cause of inflation. They're pressing the gas pedal in a moving car while at the same time gently applying breaks and wondering why it isn't stopping.
Agreed in fact the recent news said "Powell says more ‘restriction’ is coming, including the possibility of hikes at consecutive meetings" - https://www.cnbc.com/2023/06/28/powell-say-more-restriction-is-coming-including-possibility-of-hikes-at-consecutive-meetings.html after all the target of the FED is 2% of inflation rate Yearly but it seems like darkangel11 said "pressing the gas pedal in a moving car while at the same time gently applying breaks"
it not gonna work if the FED still printing money the inflation will keep increasing if the interest rate is too high it would the world if put interest rate is too low the us dollar will lose its value.
July 10, 2023, 02:37:57 PM
I don't think Powell wishes to break things to bring the inflation down, with him not getting the desired results this present a big dilemma for both the FED and the Government,
He's not going to get his results because they've been printing to help Ukraine while rising rates. They're lying to us by telling us that covid impacted the economy and the inflation is transitory. It's not transitory and its real reason is money printing. They were printing in 2020, 2021, and in 2022 when they knew there's a problem with inflation. They tried to increase rates but you can't stop inflation when you're adding to the existing supply, when increase in supply is the main cause of inflation.
They're pressing the gas pedal in a moving car while at the same time gently applying breaks and wondering why it isn't stopping.
July 10, 2023, 02:22:36 PM
Inflation although not completely under control has become substantially controllable but a clear pause signal has yet to be seen for interest rate hikes. I don't think that interest rate hikes will be stopped for a few more months especially since there is an expectation of an increase in interest rates until the end of the year.
If we need to comment on unemployment, when we check today's data we see that there is no environment that can cause a crisis in the unemployment rate. In addition, if we examine the non-farm employment data which is announced regularly every month, we see that the unemployment meets expectations.
If we need to comment on unemployment, when we check today's data we see that there is no environment that can cause a crisis in the unemployment rate. In addition, if we examine the non-farm employment data which is announced regularly every month, we see that the unemployment meets expectations.
July 10, 2023, 01:56:06 PM
I don't think Powell wishes to break things to bring the inflation down, with him not getting the desired results this present a big dilemma for both the FED and the Government, it is not a good sign knowing fully well that the election is coming, if the economy is not doing well what are they going to use to campaign, but the job of the FED is to make sure they have the monetary system under full control. I have a feeling they are going to raise the interest rate by 0.25%, the last time I checked there is 85% chance of this happening before the next quarter and with rumour of Ukraine-Russia war coming to an end we are likely to inflation coming down and likely doge recession
July 10, 2023, 12:47:44 PM
What does it mean by Feds are stopping the rate hikes and inflation going up? What is the deadline for this one. I mean if FED keep stressing the high rates and keep doing it infinitely then how a common man is supposed to tackle the situation of buying basic needs? Sometimes I don’t get the way fed is trying to control the inflation. The system itself is tricky. All I hear is fed is printing more money out of thin air, they are hiking the interest rates, unemployment is going brrr and what not. Everything seems to be orthodox methods. They always go 360 no matter what. The problem is worst when their decision starts affecting the countries across globe. The whole dollar as reserve currency makes it worst for the others.
July 09, 2023, 12:19:58 PM
High unemployment in the United States is a complex issue with various factors affecting it. It cannot be solely attributed to Jerome Powell's decision to raise interest rates. The Federal Reserve's monetary policy decisions are based on a wide range of economic indicators, including employment levels, inflation, and economic growth, and the primary goal is to promote maximum employment and stable prices.
Hmm, I am curious how you will take the freelancers are they falling under the category of unemployment? Because as you know we can never have exact data, still as now digital skills and working from home is more preferred, so how will we consider that type of income in the figures? I am not much familiar with the US monetary policy but I will say one thing my teacher use to say the control of the monetary policy should be independent of the Democratic government. The flow of the money should be prefixed and the factors relevant to it this the only solution for properly economically growing country.
July 09, 2023, 11:30:59 AM
Bump.
This is the schedule of the Federal Reserve's monthly CPI reading until the end of the year.
This month's reading will be an important one because the Federal Reserve "paused" rate hikes last month, and because of that pause, some analysts are projecting that there's a higher probability that inflation might start to go up again. The "reinflation" narrative.
Moreover, unemployment numbers are still very low, which means that demand is still high, which also means that inflation might not go down to the Federal Reserve's target of 2%. I believe they might make the most undesirable decision = higher and longer rate hikes. Perhaps going back to +50 BPS by September.
This is the schedule of the Federal Reserve's monthly CPI reading until the end of the year.
This month's reading will be an important one because the Federal Reserve "paused" rate hikes last month, and because of that pause, some analysts are projecting that there's a higher probability that inflation might start to go up again. The "reinflation" narrative.
Moreover, unemployment numbers are still very low, which means that demand is still high, which also means that inflation might not go down to the Federal Reserve's target of 2%. I believe they might make the most undesirable decision = higher and longer rate hikes. Perhaps going back to +50 BPS by September.
May 15, 2023, 12:12:58 AM
I hope to add the source and modify the images so that we can follow them with you. Reading the topic now is almost impossible.
I don't know where you got the data that the unemployment rate is so high, but I will use this source as a reference for the discussion.
I don't know where you got the data that the unemployment rate is so high, but I will use this source as a reference for the discussion.
It's actually VERY low. The data is from the Bureau of Labor Statistics.
Quote
Source: https://tradingeconomics.com/united-states/unemployment-rate
It is true that the rate of 3.4% is a little high, but it is much lower than the rates for the year 2022, when inflation was high, which means that the Federal Reserve’s policy of raising interest rates, which started from the same period, had a positive effect on reducing the number of unemployment.
I agree that the data still needs more months to judge its accuracy, but it is good compared to the state of the economy.
And for some context, Low Unemployment data = High Demand, High Demand = High Inflation, High Inflation = Federal Reserve needs rate hikes to lower inflation, which needs lower demand, which also needs HIGH unemployment - a recession.
They wouldn't tell you that, but that needs to happen and it has always happened a majority of the time when the economy has "over-heated".
The Federal Reserve might start to pivot when they recognize that Unemployment is starting to surge.
May 14, 2023, 01:46:46 AM
I hope to add the source and modify the images so that we can follow them with you. Reading the topic now is almost impossible.
I don't know where you got the data that the unemployment rate is so high, but I will use this source as a reference for the discussion.
Source: https://tradingeconomics.com/united-states/unemployment-rate
It is true that the rate of 3.4% is a little high, but it is much lower than the rates for the year 2022, when inflation was high, which means that the Federal Reserve’s policy of raising interest rates, which started from the same period, had a positive effect on reducing the number of unemployment.
I agree that the data still needs more months to judge its accuracy, but it is good compared to the state of the economy.
I don't know where you got the data that the unemployment rate is so high, but I will use this source as a reference for the discussion.
Source: https://tradingeconomics.com/united-states/unemployment-rate
It is true that the rate of 3.4% is a little high, but it is much lower than the rates for the year 2022, when inflation was high, which means that the Federal Reserve’s policy of raising interest rates, which started from the same period, had a positive effect on reducing the number of unemployment.
I agree that the data still needs more months to judge its accuracy, but it is good compared to the state of the economy.
May 13, 2023, 10:06:36 AM
I think unemployment is just one of the factor from many which is either indirect symptom of inflation. Unemployment will only reduce the burden from industrialist shoulders to minimise the investment done on cost to company. This indirectly increases the revenue and profitability so that they could pay higher taxes. That’s how whole thing works in corporate sector.
However this is just one factor we are discussing here. It does not fully contribute to the enigma. From small business owner to farmer or from car dealer to manufacturer everything pushes the market demand up and down resulting into adjusted economic cycle and inflation fluctuates accordingly.
Right now demand is disturbed due to hiked interest rates and its not other way round tbh.
However this is just one factor we are discussing here. It does not fully contribute to the enigma. From small business owner to farmer or from car dealer to manufacturer everything pushes the market demand up and down resulting into adjusted economic cycle and inflation fluctuates accordingly.
Right now demand is disturbed due to hiked interest rates and its not other way round tbh.
But it's the most important, highest one that has a direct impact on demand, and therefore has the most direct impact on inflation.
I don't want to make any predictions/forecasts, BUT I believe the Federal Reserve will only start cutting rates aggressively IF the unemployment rate starts surging, causing a recession.
May 10, 2023, 01:48:01 PM
In my opinion, the awareness level of cryptocurrency users in the US, may yet be one contributory factor to why consumer demand hasn't dropped significantly, despite the unemployment and hike in interest rates, lately.
The Fed would raise interest still until the crypto world would be met with more market volatility than before.
This can lead to some shit coins crashing too.
It is better to invest in cryptocurrency than spend CBDC.
The Fed would raise interest still until the crypto world would be met with more market volatility than before.
This can lead to some shit coins crashing too.
It is better to invest in cryptocurrency than spend CBDC.
May 10, 2023, 01:31:39 PM
I think unemployment is just one of the factor from many which is either indirect symptom of inflation. Unemployment will only reduce the burden from industrialist shoulders to minimise the investment done on cost to company. This indirectly increases the revenue and profitability so that they could pay higher taxes. That’s how whole thing works in corporate sector.
However this is just one factor we are discussing here. It does not fully contribute to the enigma. From small business owner to farmer or from car dealer to manufacturer everything pushes the market demand up and down resulting into adjusted economic cycle and inflation fluctuates accordingly.
Right now demand is disturbed due to hiked interest rates and its not other way round tbh.
However this is just one factor we are discussing here. It does not fully contribute to the enigma. From small business owner to farmer or from car dealer to manufacturer everything pushes the market demand up and down resulting into adjusted economic cycle and inflation fluctuates accordingly.
Right now demand is disturbed due to hiked interest rates and its not other way round tbh.
May 10, 2023, 11:54:47 AM
The Federal Reserve won't say it out loud in public, but what do rate hikes' actually do? Kill demand and it cannot be achieved without a high unemployment rate.
Precisely. High interest rates will result in lower economic growth, and lower economic growth will result in high unemployment which then will affect inflation rates. Recession being the proximal factor to high unemployment, of course.
Inflation becomes a positive feedback loop -- with employees demanding more pay, more demand gets created and inflation goes up even higher. Companies just combat it by laying off the employees. Powell gets a bad rep, to be honest. He's trying to play a balancing game with the interest rates based on the dumpster fire he's been handed that is the U.S. economy.
May 10, 2023, 11:14:12 AM
Jerome Powell is criticized for lowering inflation and rising interest rates. Crazy speed! The Fed? Only a piece of the economic puzzle. Numerous factors affect consumer hunger and price hikes.
However, record-high unemployment and a recession pose serious risks. Instead of raising interest rates, we should consider other economic stimulants.
It comes down to balancing wage-earners, investors, and policy-minded experts.
However, record-high unemployment and a recession pose serious risks. Instead of raising interest rates, we should consider other economic stimulants.
It comes down to balancing wage-earners, investors, and policy-minded experts.
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