Fed hikes rates for first time since 2023 as inflation worries push bond yields above 5%
Fed hikes rates as inflation worries push up bond yields
The Federal Reserve raised interest rates for the first time since 2023, defying President Trump's expectation that his appointee Kevin Warsh would cut rates. The unanimous decision, driven by stubbornly high inflation and rising global borrowing costs, signals further hikes ahead, with 16 of 18 policymakers projecting at least one more increase this year. The 10-year Treasury yield topped 5% for the first time since 2023, while the S&P 500 held up on strong earnings and retreating oil prices.
Today's policy action will support a timelier return to the Committee's 2% goal.
- dabinat
Prediction: this causes a recession in two years, right after a Democrat wins the White House, who will be blamed for it. The economy will turn around after a few years, just in time for a Republican to win and claim they fixed it.
This is how Republicans have a reputation for being economically savvy despite actual evidence to the contrary, because the general population doesn’t understand that economics runs on a time delay.
- im_down_w_otp
It bugs me that the Fed has no mechanism to really deal with supply-shock driven inflation. Prices are shooting up, but not strongly correlated to money supply at the moment. They’re shooting up because there are a dozen or more entirely capricious and totally self-inflicted supply-shocks due to bizzaro tariff “policy”, disastrous military adventurism, and general erosion of the USD the prime vessel for international trade.
The Fed tightening the money supply isn’t going to materially bring prices down, because the money supply isn’t driving the price increases.
- Sol-
I too have very strong opinions about central bank policies.
- andy_ppp
So, during the Great Depression who ended up doing well? What can be applied to today?
- legitster
- deskamess
I wonder if Canada (BoC) will follow this. I hope not!
- Aboutplants
Unanimous is a pleasant surprise
- lenerdenator
Should have been this high years ago.
The country - particularly this industry, information technology - got addicted to cheap cash. Worse, people didn't want to pay any of it back in tax, so bond yields are going to go up on the debt that was issued to cover deficit spending.
Should be interesting to see how this impacts the AI hyper-scalers. They were already burning through cash like a furnace and were running out of people to borrow from, thus the IPO hopes.