FED: Slower rate hike in December?

The Fed raised its rate by 0.75%, bringing it down to 4%. The FED tried to spare the goat and the cabbage.

The FED slows down

The US central bank has hinted that it may slow the pace of its rate hikes from December. In other words, the next rate hike will probably be 0.50%.

find HERE an anthology of reactions from finance professionals following the press conference.

That said, Jérôme Powell believes that there is still a long way to go. The chairman of the Fed thinks that “the rise in interest rates could be higher than previously anticipated”. “It is premature to consider a halt to rate hikes”he further stated:

“At some point, as I have stated in the previous two press conferences, it will become appropriate to slow the pace of rate hikes, as we approach the level of interest rates that is sufficiently restrictive to bring inflation towards our 2% target. There is a lot of uncertainty about the exact level of this interest rate, but regardless, we still have some way to go, and economic data released since our last meeting suggests that the level of interest will have to be raised higher than previously anticipated. »

The rise in interest rates will therefore continue. The question now is how high will rates go, and how long will they stay there? Probably shortly…

The reason being that the debt interest payment will quickly become the first budget of the United States. Will the US government going to war be able to afford it for long?

According to the washington postinterest on the public debt could amount to nearly $580 billion this fiscal year, compared to $400 billion in the just-ended 2022 fiscal year.

Currently, the 10-year borrowing rate in the United States is around 4.2%, the highest since 2007. As a reminder, 2007 was the year of the subprime crisis, when the rise in the price of a barrel to $150 and the Fed’s rate hike had triggered the biggest recession since 1929. A sense of deja vu?

“The US government two-year rate is at its highest since 2007”

It remains to be seen how far the Fed can venture without something breaking in the system. And we will especially remember from this press conference that December will be a turning point.

Furthermore, at the end of the day, central bankers will have no choice but to lower rates. And take out the printing press… This is what the Bank of England was recently forced to do, and what the Bank of Japan has never stopped doing.

Even the ECB stands ready to restart its QE if government borrowing rates were to slip. As such, keep a close eye on Italian borrowing rates.

Keep in mind that the “pivot” is coming, and that day, bitcoin’s forward march will resume with renewed vigor.

Watch what the President of El Salvador, Nayib Bukele, had to say about the FED this week!

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