The Federal Open Market Committee raised its benchmark rate to a range of 3% to 3.25% from 2.25% to 2.5% previously.
Following the latest rate hike, the Fed has now lifted its benchmark rate by 300 basis points, or 3% in just six months as the central bank accelerates policy to restrictive territory with the aim of slowing growth enough to make a meaningful dent in inflation.
As well as rate hikes, the Fed's balance sheet reduction, or quantitative tightening, plan is further tightening financial conditions. Earlier this month, the Fed ramped-up the pace of QT to $95 billion a month, up from $47.5 billion in June.
For some, the somewhat aggressive pace of tightening increases the risk of the Fed slowing growth by too much, pushing the economy into a deep recession.
"Clearly the risk is stacked towards exacerbating the slowdown into a hard landing. That is by far the bigger risk at the moment, and it increases with every rate raise into this slowing growth environment," Will Rhind, founder and CEO, GraniteShares told Investing.com in an interview on Tuesday.
The threat of an imminent recession, however, remains unlikely, Rhind suggests, as the economy is "still in good shape, unemployment is low, and consumers are still spending money."
The Fed's hawkish stance, however, has many convinced the possibility of a hard landing, or recession won't be enough to deter the central bank from persisting with larger hikes.
Last month, Powell delivered a hawkish surprise in a speech at the annual Jackson Hole symposium. The Fed chief said the Fed backed a "prolonged period of very restrictive monetary policy" to tackle inflation, even if it brings "some pain" for households.
Following the latest rate hike, the Fed has now lifted its benchmark rate by 300 basis points, or 3% in just six months as the central bank accelerates policy to restrictive territory with the aim of slowing growth enough to make a meaningful dent in inflation.
As well as rate hikes, the Fed's balance sheet reduction, or quantitative tightening, plan is further tightening financial conditions. Earlier this month, the Fed ramped-up the pace of QT to $95 billion a month, up from $47.5 billion in June.
For some, the somewhat aggressive pace of tightening increases the risk of the Fed slowing growth by too much, pushing the economy into a deep recession.
"Clearly the risk is stacked towards exacerbating the slowdown into a hard landing. That is by far the bigger risk at the moment, and it increases with every rate raise into this slowing growth environment," Will Rhind, founder and CEO, GraniteShares told Investing.com in an interview on Tuesday.
The threat of an imminent recession, however, remains unlikely, Rhind suggests, as the economy is "still in good shape, unemployment is low, and consumers are still spending money."
The Fed's hawkish stance, however, has many convinced the possibility of a hard landing, or recession won't be enough to deter the central bank from persisting with larger hikes.
Last month, Powell delivered a hawkish surprise in a speech at the annual Jackson Hole symposium. The Fed chief said the Fed backed a "prolonged period of very restrictive monetary policy" to tackle inflation, even if it brings "some pain" for households.
21/9 2022 20:36 Aps invest 8
106263 Og så det sædvanlige cirkus med store udsving i aktiekurserne, som det plejer ved renteændringer :). Det må være sindsygt mange penge som bliver kastet rundt på den første halve time efter offentliggørelsen. :)
Ja, FED gør nøjagtig som ventet. Så derfor skal vi ned. Nej op. Nej alligevel ned. - Lemmingerne skal lige blive enige. Og det foregår ikke ved udveksling af rationelle argumenter, men ved iagttagelse af hinandens bevægelser. Så det tager selvfølgelig lidt tid.
