Despite an ongoing banking crisis that has seen at least two major banks shut down and many other banks on the verge of collapse, the Federal Reserve is still expected to increase interest rates.
The Fed is likely to raise interest rates by 25 basis points (0.25 percent) on Wednesday, March 22, according to a strong majority of economists polled by Reuters.
Market predictions for Fed Chair Jerome Powell's moves have been turbulent. They've switched from expecting a 50 basis point (0.5 percent) after a statement from Powell to expecting a pause following the collapse of Silicon Valley Bank and Signature Bank. (Related: Federal Reserve to print another $2 trillion in fake fiat funny money to bail out financial terrorists, further devaluing dollar.)
But the economists polled by Reuters stand firm in their belief that the federal funds rate will increase from its current rate of 4.75 percent to five percent, with 76 of 82 of those polled predicting the quarter-point hike in line with interest rate futures. Economists who disagree with the prediction believe the Fed will focus on getting financial markets stable before returning to its crusade.
"If the Fed hikes this far this fast, something will break," warned Ross Mayfield, investment strategy analyst at financial services company Baird. "There's a very clear and evident history of that happening, even in slower, smaller rate-hike cycles."
"The past week's financial turmoil will give the Fed some misgivings about pushing rates much higher," said Bill Adams, chief economist at Comerica Bank. "But the Fed's policymakers have repeated many times they are more worried about raising rates too little than raising them too much. A pause in March is possible, but they are more likely to hike and risk erring on the side of too much restraint."
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"The Fed is going to have to pick its poison: Tolerate some inflation for a bit to see if its current series of rate hikes takes hold and pause, or keep hiking and deal with the financial instability caused by their own policy decisions," warned Jamie Cox, managing partner at Harris Financial Group in Virginia.
CPI increase makes it likely Fed will keep hiking rates
The Consumer Price Index (CPI) rose by 0.4 percent in February after accelerating to 0.5 percent in January. Despite the rise proving that hiking inflation rates is not working, it will likely only convince the Fed that it needs to keep increasing interest rates.
This is because monthly inflation is still rising at double the rate that the Fed needs to bring inflation back under the target of two percent inflation.
Food prices last month rose by 0.4 percent, but the cost of food consumed at home only rose by 0.3 percent, the smallest increase since May 2021. Fruits and vegetables also posted "moderate" price increases, while the cost of non-alcoholic beverages rose by one percent. The increase in shelter prices, including rents and hotel and motel accommodation, accounted for more than 70 percent of last month's CPI increase.
Learn more about the collapsing American economy at Bubble.news.
Watch this episode of the "Health Ranger Report" as Mike Adams, the Health Ranger, discusses the Federal Reserve's plan to prop up the collapsing American banking system by giving banks an additional $2 trillion.
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