{"id":1456437,"date":"2022-04-28T08:29:37","date_gmt":"2022-04-28T12:29:37","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1456437"},"modified":"2022-04-28T08:30:38","modified_gmt":"2022-04-28T12:30:38","slug":"federal-reserve-set-for-historic-measure-to-curb-inflation","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/federal-reserve-set-for-historic-measure-to-curb-inflation\/","title":{"rendered":"Federal Reserve Set for Historic Measure to Curb Inflation"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">18<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Ffederal-reserve-set-for-historic-measure-to-curb-inflation%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1456437&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><div><\/div>\n<div class=\"RichTextArticleBody\">\n<div class=\"RichTextArticleBody-body\">\n<p><span class=\"ArticlePage-articleBody-firstLetter\">T<\/span>he <a class=\"Link\" href=\"https:\/\/www.washingtonexaminer.com\/tag\/federal-reserve\">Federal Reserve<\/a> is set to take its most aggressive action in decades to rein in <a class=\"Link\" href=\"https:\/\/www.washingtonexaminer.com\/tag\/inflation\">inflation<\/a> when it meets this week \u2014 a move that would have implications for the entire economy. <\/p>\n<p>The Federal Open Market Committee, which dictates the country\u2019s <a class=\"Link\" href=\"https:\/\/www.washingtonexaminer.com\/tag\/monetary-policy\">monetary policy<\/a> and is led by Fed Chairman <a class=\"Link\" href=\"https:\/\/www.washingtonexaminer.com\/tag\/jerome-powell\">Jerome Powell<\/a>, is expected to hike its interest rate target by half a percentage point in order to drive down inflation when it meets next Tuesday and Wednesday. <\/p>\n<div class=\"Enhancement\">\n<div class=\"Enhancement-item\"><\/div>\n<\/p><\/div>\n<p>A half-point increase, also known as a 50-basis-point hike, is akin to conducting two interest rate hikes at once, given that the federal funds rate is typically moved up by a quarter of a percentage point at a time. If the Fed follows through on the more aggressive hike, it would be the first time such an action has been taken in more than two decades. <\/p>\n<p>Investors place the likelihood of the more aggressive rate hike occurring at more than 96%, according to CME Group\u2019s <a class=\"Link\" href=\"https:\/\/www.cmegroup.com\/trading\/interest-rates\/countdown-to-fomc.html\">FedWatch<\/a> tool, which calculates the probability using Fed fund futures contract prices. Most investors are also predicting two more half-point hikes in June and July. <\/p>\n<p><b><a class=\"Link\" href=\"https:\/\/www.washingtonexaminer.com\/policy\/economy\/how-rising-interest-rates-will-affect-federal-spending-and-debt\">HOW RISING INTEREST RATES WILL AFFECT FEDERAL SPENDING AND DEBT<\/a><\/b> <\/p>\n<p>The situation the Fed finds itself in is historic. Consumer prices rose a staggering 8.5% for the 12 months ending in March, the fastest rate since 1981. In addition to hiking interest rates, the Fed is also likely to begin shrinking its balance sheet by $60 billion in treasuries and $35 billion in mortgage-backed securities each month. <\/p>\n<p>Desmond Lachman, a senior fellow at the American Enterprise Institute, told the <i>Washington Examiner<\/i> that the central bank will have a difficult time threading the needle of dampening inflation while trying to avoid a recession. <\/p>\n<p>Further fueling recession fears, the yields \u2014\u00a0that is, the rate of earnings generated by the security over time\u00a0\u2014 on certain shorter-run <a class=\"Link\" href=\"https:\/\/www.washingtonexaminer.com\/tag\/treasury\">Treasury<\/a> notes <a class=\"Link\" href=\"https:\/\/www.washingtonexaminer.com\/policy\/economy\/a-key-bond-market-indicator-is-flashing-major-recession-risk\">have at times in recent weeks risen<\/a> higher than those on certain longer-run notes, a situation that is called an &#8220;inversion.&#8221; The sign means that investors believe inflation won\u2019t be a problem over the long run because the economy is going to enter a recession. <\/p>\n<p>The share of economists predicting a recession is on the rise, with nearly 30% predicting one in the next year in a survey <a class=\"Link\" href=\"https:\/\/www.wsj.com\/articles\/recession-risk-is-rising-economists-say-11649592002\">conducted<\/a> by the <i>Wall Street Journal<\/i>. <\/p>\n<p>Rep. Kevin Brady, the top GOP tax writer, said on Wednesday that there is \u201cno question\u201d that the Fed\u2019s policies under Powell were a major contributor to today\u2019s soaring inflation. The Texas lawmaker said the Fed has put itself into a pickle by not using its monetary policy to tamp down demand sooner. <\/p>\n<p>\u201cI think the Fed is in a difficult position of their own making, it will be incredibly difficult to thread the needle here, and unfortunately, they created these circumstances through their inaction last year,\u201d Brady told the <i>Washington Examiner<\/i> during a call with reporters. <\/p>\n<p>Lachman said that consumers shouldn\u2019t expect much of a tone shift from the Fed following its meeting this week because the central bank has tried to message what it plans to do in advance of taking policy action. Markets have also already priced in a half-point hike. <\/p>\n<p>Just because the Fed is now moving aggressively against inflation doesn\u2019t mean consumers will see prices slowing right away. Lachman said that much monetary policy operates with fairly long legs, meaning that prices are expected to keep increasing at a higher rate than wanted throughout the year. Still, inflation could start to decrease quicker if the economy ends up sinking into a recession. <\/p>\n<p>Consumers will see the tangible effects of the interest rate hikes most prominently in the housing market. As of Wednesday, the average 30-year fixed-rate mortgage was <a class=\"Link\" href=\"https:\/\/www.mortgagenewsdaily.com\/mortgage-rates\">5.3%,<\/a> up more than 2 percentage points from just a year before. The higher rates are making housing less affordable. <\/p>\n<p><b><a class=\"Link\" href=\"https:\/\/www.washingtonexaminer.com\/\">CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER<\/a><\/b> <\/p>\n<p>As for how history will judge the current situation, Lachman said that the current Fed will be judged \u201cvery badly\u201d for its actions on inflation. <\/p>\n<p>He thinks that history will come down favorably on Powell\u2019s actions early in the pandemic, when he acted to pump liquidity into the market and slashed interest rates, but that the Fed\u2019s actions over the last year will be scrutinized.<\/p>\n<\/p><\/div>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>The Federal Reserve is set to take its most aggressive action in decades to rein in inflation when it meets this week \u2014 a move that would have<\/p>\n","protected":false},"author":498,"featured_media":2315279,"comment_status":"open","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[],"tags":[],"class_list":["post-1456437","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry"],"_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1456437","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/498"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1456437"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1456437\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2315279"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1456437"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1456437"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1456437"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}