{"id":1722111,"date":"2022-11-02T17:04:00","date_gmt":"2022-11-02T21:04:00","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1722111"},"modified":"2022-11-02T17:04:06","modified_gmt":"2022-11-02T21:04:06","slug":"what-the-federal-reserves-changing-approach-toward-rate-hikes-could-mean-for-the-economy","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/what-the-federal-reserves-changing-approach-toward-rate-hikes-could-mean-for-the-economy\/","title":{"rendered":"What The Federal Reserve\u2019s Changing Approach Toward Rate Hikes Could Mean For The Economy"},"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\">28<\/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%2Fwhat-the-federal-reserves-changing-approach-toward-rate-hikes-could-mean-for-the-economy%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=1722111&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--><p>The <a href=\"http:\/\/dailywire.com\/topic\/federal-reserve\" target=\"_blank\" rel=\"noopener\">Federal Reserve<\/a> raised the target <a href=\"http:\/\/dailywire.com\/topic\/interest-rates\" target=\"_blank\" rel=\"noopener\">federal funds<\/a> rate by 0.75% on Wednesday, but indicated that officials will avoid an overly zealous contractionary policy even as economists warn of a lagged effect that could reach into next year.<\/p>\n<p>The <a href=\"https:\/\/www.dailywire.com\/news\/federal-reserve-hikes-interest-rates-three-quarters-of-a-point\" target=\"_blank\" rel=\"noopener\">fourth consecutive<\/a> 0.75% increase occurs as inflation remains elevated at four-decade highs. Target interest rates are now set between 3.75% and 4%.<\/p>\n<p>\u201cIn the face of stubbornly high inflation, the Federal Reserve raised interest rates aggressively once again,\u201d Bankrate Chief Financial Analyst Greg McBride remarked in a statement provided to The Daily Wire. \u201cUnfortunately, we\u2019re likely to feel the pain of a slower economy before we see the gain of lower inflation.\u201d<\/p>\n<p>The stock market reacted positively in the immediate aftermath of the rate hike announcement since a statement from the Federal Reserve Board of Governors affirmed that officials \u201cwill take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.\u201d The new language had not been included in previous announcements.<\/p>\n<p>McBride affirmed that the central bank does not intend to pause or reverse their contractionary monetary policy. \u201cUpcoming meetings will bring smaller rate hikes, but a higher eventual stopping point and for a longer period once we get there,\u201d he continued. \u201cThey want interest rates to be an economic headwind, but they want to be guarded about overdoing it. If only inflation will cooperate.\u201d<\/p>\n<p>Policymakers at the Federal Reserve had <a href=\"https:\/\/www.dailywire.com\/news\/federal-reserve-releases-plan-to-more-urgently-address-high-inflation\" target=\"_blank\" rel=\"noopener\">pegged<\/a> a near-zero target interest rate immediately following the onset of the lockdown-induced recession, also moving to acquire government bonds in order to increase the money supply and stimulate economic activity. Many leading analysts have more recently <a href=\"https:\/\/www.dailywire.com\/news\/elon-musk-agrees-with-a-furious-jeremy-siegel-that-fed-actions-which-blew-up-the-stock-market-make-absolutely-no-sense\" target=\"_blank\" rel=\"noopener\">criticized<\/a> the central bank amid the return to a contractionary regime, contending that officials who were lackluster in their response to rising price levels are now causing undue harm through their zeal to manage inflation.<\/p>\n<p>Target interest rate decisions carry impacts across every corner of the economy. The 30-year fixed mortgage rate, for instance, rose above 7% after remaining below 3% for much of the past two years, according to <a href=\"https:\/\/fred.stlouisfed.org\/series\/MORTGAGE30US\" target=\"_blank\" rel=\"noopener\">data<\/a> from government-backed mortgage company Freddie Mac.<\/p>\n<p>\u201cThe lagged effect of all these interest rate hikes means a rapidly slowing economy in 2023,\u201d McBride said. \u201cThe abrupt slowdown in the housing market is a harbinger of broader economic slowing to come.\u201d<\/p>\n<p>Federal Reserve officials have indeed <a href=\"https:\/\/www.dailywire.com\/news\/top-federal-reserve-official-reveals-consequence-of-higher-interest-rates\" target=\"_blank\" rel=\"noopener\">warned<\/a> on multiple occasions that economic growth will be \u201cessentially flat\u201d in the second half of the year following two consecutive quarters of negative growth, implying that the United States had entered a <a href=\"https:\/\/www.dailywire.com\/news\/economy-turns-positive-in-third-quarter-biden-takes-credit\" target=\"_blank\" rel=\"noopener\">technical recession<\/a>. A recent <a href=\"https:\/\/www.imf.org\/en\/Publications\/WEO\" target=\"_blank\" rel=\"noopener\">report<\/a> from the International Monetary Fund projected that the global economy will grow at a meager 2.7% in 2023, following 3.2% growth in 2022 and 6% growth in 2021, marking the weakest expansion in two decades.<\/p>\n<p>Federal Reserve Vice Chair Lael Brainard <a href=\"https:\/\/www.dailywire.com\/news\/federal-reserve-hikes-interest-rates-three-quarters-of-a-point\" target=\"_blank\" rel=\"noopener\">cautioned<\/a> last month that the \u201cmoderation in demand due to monetary policy tightening is only partly realized\u201d so far, with particularly interest-sensitive sectors like housing anticipated to see the greatest detriment first. \u201cIn other sectors, lags in transmission mean that policy actions to date will have their full effect on activity in coming quarters, and the effect on price setting may take longer,\u201d she said. \u201cThe moderation in demand should be reinforced by the concurrent rapid global tightening of monetary policy.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Federal Reserve raised the target federal funds rate by 0.75% on Wednesday, but indicated that officials will avoid an overly zealous contractionary policy even as economists warn of a lagged effect that could reach into next year. The fourth consecutive 0.75% increase occurs as inflation remains elevated at four-decade highs. Target interest rates are &#8230;<\/p>\n","protected":false},"author":99,"featured_media":1704216,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","fifu_image_alt":"","footnotes":""},"categories":[541],"tags":[],"class_list":["post-1722111","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-the-daily-wire"],"fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1722111","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\/99"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1722111"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1722111\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/1704216"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1722111"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1722111"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1722111"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}