The Federal Reserve just raised interest rates again for the sixth time since the policymaking Federal Open Market Committee began raising rates off near-zero in December 2015. “The economic outlook has strengthened in recent months,” the committee said in its post-meeting statement.
But the truth is, a hike in interest rates, albeit small, could affect those who already live paycheck to paycheck by forcing them into a dire financial situation of having to choose to pay the higher rates or paying another bill. But central bankers don’t care. It’s not their job to care about the public.
Central bankers, led by Jerome Powell in his first meeting as chairman, approved the widely expected quarter-point hike that puts the new benchmark funds rate at a target of 1.5 percent to 1.75 percent. The funds rate is closely tied to interest rates, which will rise soon on the heels of this decision, according to CNBC.
Along with the increase came another upgrade in the Fed’s economic forecast, and a hint that the path of rate hikes could be more aggressive. The market currently expects three hikes for 2018, and that remained the baseline forecast, but at least one more increase was added in the following two years. “The economic outlook has strengthened in recent months,” the committee said in its post-meeting statement, a sentence that had not been in previous releases. The language came even though the committee said earlier in the statement that “economic activity has been rising at a moderate rate,” a seeming downgrade from January’s characterization of a “solid” rate.
But many financial experts are sounding alarms and asking that we take a step back and ponder what’s really going on in the markets. Sure, the Fed and the media all claim the economy is doing great but is it really? Financial guru Peter Schiff, who accurately predicted the 2008 recession says rising interest rates will not be a good sign for this unstable and highly volatile economy. The bubble has to burst sometime, and rising rates could do it.
“The Fed were dragging their feet in raising rates while Obama was president. They talked about raising rates but at the end of the day, they barely moved them up. The pace of hikes has increased since Trump was elected, but part of the reason for that…I mean, the media is not talking down the economy; if anything they’re overhyping the economy. Everybody’s talking about how strong the economy is, how everything is great. Everybody is taking credit for this great economy. The Fed wants to take credit for it, Trump wants to take credit for it, so if everybody wants to talk about how great the economy is, the Fed doesn’t have any excuse if it doesn’t raise rates…in order to keep up the pretense that the economy is as strong as everybody thinks, the Fed is in this box where it has to raise rates.
But they [the Fed] can’t tell the truth that it’s really a bubble, and if we raise rates, we’re gonna prick it, so they’re kinda in this bind. And they are still telegraphing that they’re gonna raise rates three or four times this year. And that is the problem.“ -Peter Schiff
Is this the beginning of the “popping” of the economic bubble financial experts like Schiff have predicted? Only time will tell. We are just presenting an alternative view to what the mainstream media has been shoving in the faces of the public regarding the economy.
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