Fed Hikes Rates To Feign Confidence – Ep. 235

The Peter Schiff Show Podcast

Today the Federal Reserve raised interest rates for the third time in 10 years Of course, the tightening cycle began with the first rate hike in December of 2015 Followed by the second rate hike in December of last year And now, breaking from tradition, rather than waiting an entire year for the third hike We got the hike in March Of course the Fed had allowed market expectations to rise to 100% in anticipation of this rate hike When the Fed raised rates for the first time they talked about raising rates for an awfully long time before they actually got around to doing it Ironically, though, about 2 hours earlier than the rate hike announcement, the Atlanta Fed revised down again its projection for Q1 GDP to .9 Remember - at the beginning of February, not even 6 weeks ago, the Atlant Fed was at 3.4% for Q1 GDP They're down to .9%! That is a huge collapse in estimates for economic growth in the first quarter And I'm sure it portends ill for subsequent quarters And remember - Janet Yellen has always said that the Federal Reserve is not on a preset course And that rate hikes that they are forecasting will only happen to the extent that their economic forecast pans out That all of their rosy expectations of economic recovery has come true Yet none of it has come true If anything, you've had a collapse in growth estimates since the last time the Fed met, yet The collapse in GDP forecast has done nothing to alter the Fed's path, because they've ignored all the data And they raised interest rates yet again That doesn't mean that interest rates are high, I mean they're still very low Remember, we're still not at a range between .75% and 1% so the average of that range, the midpoint, is still below 1% 1% was the emergency level that Alan Greenspan slashed rates to, after the dot com bubble bust and after the September 11 terrorist attack sent the U.S. economy into recession At that point, in a recession, the lowest rates got was 1% The Fed would have to hike rates again to get back up there