- Citing continued inflation, supply and demand issues, and food and energy prices, the US Federal Reserve (Fed) announced on Wednesday that it's raising rates by another 0.75%, bringing the central bank's benchmark rate to the 3.75% - 4% target range.
- The bank also signaled plans for further hikes, though likely in smaller increments, with major US stock indexes falling in the wake of the announcement. At the center of market valuation reactions was a more than 3% drop in the Nasdaq Composite.
- With the Fed's preferred measure showing inflation still above the 2% target — having risen from 4.9% in August to 5.1% in September — Fed chairman Jerome Powell said they aren't close to pausing rate hikes, adding that the concern is that inflation could become "entrenched" in the economy.
- Facing inflation not seen since the early 1980s, some experts say the Fed should maintain its aggressive rate hike campaign even if it raises unemployment, which is currently at 3.5%. Former Treasury Secretary Larry Summers predicted unemployment would need to rise above 4.4% to reign in inflation.
- With today's increase being the fourth 0.75% hike in a row, the Fed's current projections call for a more modest 0.5% hike in mid-December and subsequent hikes in early 2023.
- This year's series of rate hikes has reportedly contributed to the fastest deceleration in home price growth on record, as mortgage rates have soared to more than 7%. Other interest rates, such as for auto and credit card loans, have risen to highs not seen in over a decade.
- Republican narrative, as provided by Washington Examiner. While even Democrats like Elizabeth Warren continue to point out the Fed's failed interest rate plan, Jerome Powell is still pushing ahead despite the inevitable job loss it will cause. All the while, the White House keeps making empty statements about "stable and steady growth" as their constituents face a devastating economy.
- Democratic narrative, as provided by USA Today. Though many may not remember, the economic crisis of the early 1980s saw inflation even worse than today's, and it was interest rate hikes that brought it down. No one is at fault for Putin's war in Ukraine or the pandemic, but we all, unfortunately, have to endure temporary hardship to fight this crisis as quickly as possible.