Fed minutes: 'Ongoing' rate hikes needed, 2 officials wanted 50-point hike

Last edited Wed Feb 22, 2023, 05:06 PM - Edit history (1)

Yahoo Finance, 2/22/23

This is in regard to the January 31 - February 1 Federal Open Market Committee (FOMC) meeting, whose meeting minutes came out today, Feb 22. These are the people that vote on interest rate hikes

https://finance.yahoo.com/news/fed-minutes-ongoing-rate-hikes-needed-2-officials-wanted-50-point-hike-195355428.html

And that was back when inflation looked like it was on a definite cool-down trend (I thought so too back then).

This January 31 - February 1 FOMC meeting (discussed above whose minutes came out today) was before:

* the very hot jobs report that came out February 3 with 517,000 new payroll jobs

* the hot CPI and PPI (wholesale prices) inflation reports below that came out in mid February

* the 3% (in just one month) retail sales sales increase in January (the report came out February 15).

Lately, particulary since the mid-February CPI and PPI and retail sales reports, all I have been reading are bullish (meaning pushing for larger interest rate increases) from various members of the Federal Open Market Committee (FOMC) that vote on rate hikes,

As for the meme that interest rate rises won't affect the current inflation, because it's is a global phenomenon caused by supply chain disruptions, Ukraine/Russia, etc., that may be true, but I should note that none of the FOMC or other Federal Reserve people talk that way, and neither, FWIW, does anyone in the administration that I've heard of. Paul Volcker would also disagree (however, the price we paid was a double-dip recession). As for globally, other central banks (except Turkey) have been pushing up their interest rates too.

So expect at least a 0.5% rate increase at the next FOMC meeting March 21-22. Don't be fooled by anything "dovish" that you read in the Jan 31 - Feb 1 meeting minutes above.


On the inflation front:

3 months annualized: Core CPI: 4.58%, Core PPI: 4.63%,

I chose 3 months for its recency, but that it's still a longer period than one month, so less likely that one can dismiss it as a "one off". (The latest one-month numbers -- January numbers as reported mid-February -- aren't good either: Core CPI: 5.06%, Core PPI: 7.27%, CPI: 6.38%, PPI: 8.18% annualized rates using the actual index numbers)

I thought they were on their way down before the mid-February reports of January inflation.





More on the graphs of monthly CPI, PPI, Core CPI, PPI, and why the Fed and I think core is better for predicting future inflation
https://www.democraticunderground.com/10143034894#post1

At 4.5% inflation, the purchasing power of the dollar drops by half in just 16 years.

I'm not looking for the stock market to bail me out either - its valuations are way way high on a historic basis. That was justified back when interest rates were trivial (so there was no real competition to stocks - "TINA - There Is No Alternative" ), but not so much anymore.