Wednesday, March 21, 2018

Federal Reserve Expected to Raise Interest Rates Today

Under the new leadership of Jay Powell, as chairman of the Federal Reserve, the Fed is expected to raise interest rates today following a two-day meeting of the Fed's monetary policy committee, the Federal Open Market Committee.

The hike is expected to be 25 basis points (.25 of one percent). The current effective Fed Funds rate is 1.45% . The new hike will push the effective Fed Funds rate to 1.70%.

The hike will be the sixth Fed hike since December 2015.

At the time of the 2105 hike, Austrian-lites claimed that the hike back then would result in an immediate recession and the Fed having to reverse the hike. Of course, none of this happened, Two and one-half years later there is still no recession and the likelihood of a recession this year is slim.

In the EPJ Daily Alert, I put the odds of a recession in the second half of 2018 at only 15%. Although at the present time, I am wary of the general stock market.

The chance of a recession in 2019, from my perspective, is about 50/50.

A sampling of the comments at EPJ just before the 2015 hike and immediately after:
The Federal Reserve will not raise interest rates. If they do this debt-ridden world economy will choke. On the higher debt service costs.-November 22, 2015
Robert how can you not look at manufacturing and bulk dry shipping and every single commodity and retail sales and not think recession hasn't begun?-December 15, 2015
[T]his will be the only time they will raise them, then they will need to begin QE4, and most likely lower the rates back down due to the chaos it will create. -December 15, 2015
Raising to 1% would gouge the bubble and all hell would break loose in financial markets heavily addicted to free money. The bust cycle would erupt in earnest.-December 15, 2015

Don't worry Robert, rates will eventually rise and then you will be able to show all of us how absurd our comments were.-November 22, 2015

-Robert Wenzel 

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