Fed raises bank policy rate by 75bps, Elizabeth Warren says central bank could “trigger a devastating recession” – Economy Bitcoin News

On Wednesday, the US Federal Reserve raised its federal funds rate by 75 basis points (bps) in order to tame inflation and stabilize the US economy. The recent rate hike is the US central bank’s third rate hike after raising the benchmark rate by 50 basis points last March.

Fed raises rate by 75bps for second consecutive time to tame inflation, central bank says “inflation remains high”

With hot inflation in America, the US Federal Reserve raised the federal funds rate once again, raising it by 75bps Wednesday afternoon at 2pm (ET). The increase was the second consecutive 75 basis point increase.

“Recent spending and production indicators have eased. However, job gains have been robust in recent months and the unemployment rate has remained low, “the Fed said in a press release Wednesday.” Inflation remains high, reflecting supply and demand imbalances related to the pandemic, rising food and energy prices and wider price pressures. ”

The move follows the recent Consumer Price Index (CPI) report which notes that CPI data reflected a 9.1% year-over-year increase. June CPI data had increased at the fastest annual rate since 1981.

It also comes after the recent debate on the technical definition of “recession”. Last week the White House released two blog posts stating that a second consecutive quarter of negative gross domestic product (GDP) does not indicate that the United States is in a recession.

One of the blog posts from the Biden administration featured Treasury Secretary Janet Yellen who confirmed she believes it is not the “technical definition” of a recession despite sites like Investopedia calling it a recession and economic resources and business cycle textbooks. .

After White House and Yellen comments on the recession, economist Paul Krugman She said “ignore the two-quarter rule … We may have a recession, but we’re not there now,” in a recently published blog post. This is after Krugman apologized for being wrong about inflation.

During this month’s Fed meeting, the US central bank said Russia is hurting the global economy. “Russia’s war against Ukraine is causing enormous human and economic hardship,” members of the Federal Open Market Committee (FOMC) said Wednesday. “The war and related events are creating further upward pressure on inflation and weighing on global economic activity. The committee is very attentive to the risks of inflation ”.

“The [FOMC] seeks to achieve maximum employment and inflation at a rate of 2 percent over the long term, ”the Federal Reserve press release added. “In support of these goals, the Committee has decided to increase the target range for the federal funds rate from 2-1 / 4 to 2-1 / 2 percent and expects continued increases in the target range will be appropriate.”

The Massachusetts senator says a Hawkish central bank could trigger a recession

In addition to the recent Fed rate hike, Senator Elizabeth Warren (D-Mass) published a blog post via the Wall Street Journal stating that the US central bank could trigger “a devastating recession.”

“If the Fed cuts too much or too sharply, the resulting recession will leave millions of people – workers with disproportionately lower wages and workers of color – with smaller wages or no paychecks at all,” Warren’s editorial details.

Additionally, despite critics saying the US Federal Reserve has not yet begun quantitative tightening (QT) by stopping the bank’s massive bond purchases, the central bank said this was a priority on Wednesday.

“In addition, the committee will continue to reduce its holdings in Treasury and agency debt and agency mortgage-backed securities, as outlined in the Federal Reserve’s balance sheet size reduction plans issued in May,” concludes the report. Fed statement.

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What do you think about the Fed raising its federal funds rate by 75bps on Wednesday afternoon? Let us know what you think about this topic in the comments section below.

Jamie Redman

Jamie Redman is the News Lead of Bitcoin.com News and a financial technology journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open source code and decentralized applications. Since September 2015, Redman has written more than 5,700 articles for Bitcoin.com News on the disruptive protocols emerging today.

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