The Fed raises rates to 1.75%. What is its impact?

On Wednesday, June 15th (Eastern Daylight Time), the Federal Reserve announced after the meeting that it plans to raise its target range of Federal Funds rate from 0.75% ~1.00% to 1.5% ~1.75%. It is the first time the Fed has raised interest rates by 75 basis points in 27 years.

Before the meeting, it was widely predicted that the rate hike would be 75 basis points this time. After this, the Fed will have 4 meetings on interest rates in July, September, November, and December. The market expects that by the end of this year, the Fed will raise interest rates to between 3.0%-3.5%.

Reasons Behind

Since the beginning of this year, inflation in the United States has been soaring:

There is no doubt that the rising interest rates will bring about depression in the global economy.

But the essential reason for this inflation is the massive round of quantitative easing that began in 2020 in Western economies led by the United States. Oil prices, food prices, epidemics, and wars are all catalysts, not essential causes.

The Impact

Considering the current situation, if the interest rate rises to 3.5%, it will have a certain impact on the US economy. It will be a large range if the interest rate increases from 0.25% to 3.5%, especially in one year.

If interest rates continue to rise, it will significantly inhibit the economy, especially investment. U.S. companies will face higher financing costs and fewer profits, which will further prompt to reduce investment and form a vicious circle.

 

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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  • CHChiang85
    ·2022-06-17
    recession liao
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    • eo1668
      omg
      2022-06-17
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  • Pay2Win
    ·2022-06-17
    If only I have more cash to buy more dipping stock... [Cry]
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    • Ahleepapa
      Sure i will continue to short until u cry for ur mother🤡
      2022-06-17
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  • ey79
    ·2022-06-17
    Nice share
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  • dallanube
    ·2022-06-17
    down! Down! DOWN!
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    • ckh
      ok
      2022-06-17
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  • AyKing
    ·2022-06-17
    Hold on every one.
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  • GerryLoh
    ·2022-06-17
    good sharing thanks
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  • yungsinc_94
    ·2022-06-17
    stay positive [Happy]
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  • 来真的
    ·2022-06-19
    Question is all the measure by the Feb can it lead to soft landing or cause a recession?
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  • wallence82
    ·2022-06-17
    so what's next
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  • Anna79
    ·2022-06-17

    [Miser] [Miser] 

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  • Woobenny
    ·2022-06-17
    Nice summary 👍🏻
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  • Chilli Padi
    ·2022-06-22
    Prior to raising the stock market went on a wild roller coaster. After the hike the stock market “fear” was almost gone.
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  • 金淀
    ·2022-06-17
    第二与第一的差距越来越小了!
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  • Vandaluus
    ·2022-06-17
    Recession coming.
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  • TKPK
    ·2022-06-21
    there goes my mortgage loan, going to be raised soon [Cry] [Cry] [Cry]
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  • hh488
    ·2022-06-22
    Indeed quite scary.
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  • ZU888
    ·2022-06-22
    thanks for sharing!
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  • Richard0208
    ·2022-06-19
    Recession soooon
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  • Kyesu
    ·2022-06-17
    Read and thanks
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  • GANCL
    ·2022-06-17
    Inflation is very serious
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