Fed Hikes Benchmark Bank Rate 75 Basis Points, Elizabeth Warren Says Central Bank Could ‘Trigger A Devastating Recession’ Crypto Briefing

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On Wednesday, the US Federal Reserve raised the federal funds rate by 75 basis points (bps) in an effort to control inflation and stabilize the US economy. The recent rate hike is the third rate hike by the U.S. central bank after raising the benchmark rate by 50 basis points last March.

Fed raises rate 75 basis points for second straight time to rein in inflation, central bank says ‘inflation remains elevated’

With inflation scorching in America, the US Federal Reserve hiked the federal funds rate again, raising it by 75 basis points on Wednesday afternoon at 2:00 p.m. (ET). This is the second consecutive increase of 75 basis points.

“Recent spending and production indicators have softened. Nonetheless, job gains have been robust in recent months and the unemployment rate has remained low,” the Fed said in a press release on Wednesday. “Inflation remains elevated, reflecting pandemic-related supply and demand imbalances, rising food and energy prices and broader price pressures.”

The move follows the recent Consumer Price Index (CPI) report which noted that CPI data reflects a 9.1% year-over-year increase. June CPI data had risen at the fastest annual rate since 1981.

This also comes after the recent debate over the technical definition of a “recession”. Last week, the White House released two blog posts that claim that a second straight quarter of negative gross domestic product (GDP) does not indicate that the United States is in a recession.

One of the Biden administration’s blog posts featured Treasury Secretary Janet Yellen confirming that she believes this is not the “technical definition” of a recession despite websites like Investopedia defining it as a recession and economic resources and business cycle textbooks.

After comments from the White House and Yellen about a recession, economist Paul Krugman said “ignore the two-quarters rule… We might have a recession, but we’re not now,” in a recently published blog post. It was after the fact that Krugman apologized for being wrong about inflation.

At this month’s Fed meeting, the US central bank claimed Russia was hurting the global economy. “Russia’s war against Ukraine is causing enormous human and economic hardship,” members of the Federal Open Market Committee (FOMC) said on Wednesday. “The war and related events are creating additional upward pressure on inflation and weighing on global economic activity. The committee pays close attention to inflation risks.

“The [FOMC] seeks to achieve maximum employment and inflation at the rate of 2% over the long term,” the Federal Reserve press release added. “In support of these objectives, the Committee has decided to raise the target range for the federal funds rate to 2-1/4 to 2-1/2 percent and anticipates that continued increases in the target range will be appropriate.”

Massachusetts senator says hawkish central bank could trigger recession

In addition to the Fed’s recent rate hike, Sen. Elizabeth Warren (D-Mass), published a blog post via the Wall Street Journal that said the US central bank could trigger “a devastating recession.”

“If the Fed cuts too much or too sharply, the resulting recession will leave millions of people – low-wage workers and disproportionately workers of color – with smaller paychecks or no paychecks at all. “, details the editorial of Warren.

Moreover, despite criticism that the US Federal Reserve has yet to begin quantitative tightening (QT) by halting the bank’s massive bond purchases, the central bank said on Wednesday it was a priority.

“In addition, the committee will continue to reduce its holdings of Treasury securities, agency debt and agency mortgage-backed securities, as outlined in plans to reduce the size of the Federal Reserve’s balance sheet that were released in May,” the Fed statement concluded. .

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What do you think of the Fed raising the fed funds rate by 75 basis points on Wednesday afternoon? Let us know what you think about this topic in the comments section below.

Jamie Redman

Jamie Redman is the News Manager at Bitcoin.com News and a fintech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He is passionate about Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written over 5,700 articles for Bitcoin.com News about disruptive protocols emerging today.




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