Hello, I’m Stewart Heath of Harvard Grace. Lets talk about inflation and interest rates, again! Reaction to Fed’s last meeting of 202
You know, we received some interesting news from the fed meeting last week about what their plans are for 2022. They’re going to hasten up their end of their bond buyer by buying the emergency bond and that’ll be completed by March. Now they’re talking about up to three interest rate increases next year. So, this is a shocking wake up call for an economy that’s been used to accessing some easy money and easy credit. Never-ending new highs for the stock market. Matter of fact, today being Monday, we see the market reacting on Friday and today down about a thousand points between the two. Now they say it’s Alma Cron, and that may be in there as well, but I’m convinced that is more about the future of the fed policy for next year. Coming back to what I consider to be a more realistic policy, without all of the stimulus money that’s going on out there, just pumping money into the economy.
Attached to this, Bloomberg article, the Fed’s new dot plot as they say. This is sort of the futures for fed funds, we’re basically near zero now. The rate on fed funds at 0.25, and they’re predicting that be up. I’m going to call that a point and a half by the end of next year. That’s pretty major. This will have an impact on borrowing and any industry that has a to do with borrowing such as a real estate. Anybody else who uses credit extensively that’s a point and a half, not all the end of the world. You’re still below, excuse me if I’m reading this wrong, about 0.75. It’s not even up to a point by the end of next year and maybe up to a 1.5 by the end of 23. So, we know that the fed will move very slowly. None of this is going to happen where it’s going to shock the economy, because that’s not what they do.
Take a look at this article, we would love to hear what you all think about what’s happening next year. I do believe the fed should react in order to combat inflation, which is running rampant. I also think the market may be reacting to what is reported to be the death of the bill as Joe Manchin has said, I’m done, he’s tired of negotiating. There’s an awful lot of people in industries that were counting on another $3 trillion, flooding the economy next year. There’s probably some of that in there as well. So much for the Santa Claus rally for 2021!
I would love to hear what y’all think. Comment. Tell me I’m crazy! I would love to hear your perspectives as well. Thanks a lot. Until next time!
Reference:
https://finance.yahoo.com/news/u-economy-loses-fed-fiscal-070000314.html