USA & Canada May Raise Rates By Very Agressive 0.75% Next Time

[Economy 52,956]

https://www.bnnbloomberg.ca/fed-task-gets-tougher-putting-75-basis-point-hike-back-in-view-1.1777179

 

USA has joined Canada in market expectations that the next hike may be even more agressive than the last possibly going up by 75 basis points (3X the normal standard 25 basis points movement) as it seeks to try to stay ahead of Inflation

 

The US rate currently at 1% would jump to 1.75% almost doubling overnight. Canada's 1.5% rate would jump to 2.25% or Inside the 2% to 3% range that is considered neutral

 

In related news Australia surprised markets with a super hike themselves with a 50 basis point increase as it raised rates from 0.35% to 0.85%

 

A growing number of analysts believe this marks the end of a long era of low interest rates and a new era of more normal interest rates

[The Fame 4,300]

Why is all this expensive **** happening during MY timeline. 

[Economy 52,956]

1 hour ago, The Fame said:

Why is all this expensive **** happening during MY timeline. 

Expensive? Rates will still be historically low by long term standards

 

Actually higher rates over the long term help keep prices of many things down

 

This cheap money we've had since 2008 (14 years now) was meant to stimulate spending and economy and while it succeeds in doing that to an extent, when rates are left at emergency lows for that long you start to get some side effects and distortions that backfire on the very people it's meant to help

 

Low rates for example lower people's mortgage payments making it easier to make ends meet and leave more disposable income available. But it also makes it possible to take on larger mortgages and bid the market higher so after a while it just leads to higher house prices that offset any savings by lower rates screwing over the next generation (AK us)

 

It also encourages wrekcless and unproductive spending by large companies on stuff like share buybacks cuz it's so cheap to borrow money to do that. It also keeps zombie companies alive. Some companies that barely make it despite paying employees minimum wage are better off dying than taking up labor. Low rates keeps them alive longer than they should be

 

Low rates also encourages a lot of speculation in stock market etc because safe investments on stuff like bonds or savings accounts become useless and people have to take bigger risks on their retirement portfolios etc to get any gains

 

There's a lot of bad sh*t that comes from rates being too low for too long. A normalization of rates may be painful at first but over the longer term it will help normalize some of this nonsense sapping wealth in the economy towards speculative bubbles rather than productive enhancing investments and growth