Have we hit peak Federal interest rates?

currently we sitting at 3% to 3.25%

Fed has signaled to increase it by 1.25% by ends of the year.

which would put it at 4.25% to 4.5%.

I feel like they will actually increase it by 2% before the year is over which would put it at 5% to 5.25%

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We’re never paying the national debt or balancing a budget ever again so I think we’ll max out around 5-6%. Then they will have to start cutting again to keep the house of cards up




Consecutive rate hikes coming 4 of them together this time.

1 september

1 October

1 november

1 december

Each are 75 points.

How high can we go

My guess is 10% by end of spring 2023.

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I remember 1985, CD rates were 15%


The person who pushed the rates that high during carter is also advising Biden team.

Under carter they pushed it up fast and brought it down slowly this time they taking up slowly holding it then bringing dowm fast to shock the economy.

From beyond the grave? Paul Volker died in 2019


Inb4slowmode. :slight_smile:


And Volcker was widely revered as the greatest fed chief in history. Appointed by Carter but he beat inflation on Reagan’s watch and had to maneuver death threats and lots of unhappy people because he knew it had to be painful for it to get better but he was steadfast that he would keep rates going up until it started to turn. After that we had a great run of prosperity as we do most times after recessions or downturns.

And that’s the reality… that rates will peak when inflation subsides. The past couple decades lulled us into thinking we’d never have it again but keeping people going during COVID threw a lot of money into the supply. The labor markets are still strong, which is good, but that pushes wages up, also good, then pushes prices and inflation up… bad.

My bet would be it looks like it did around 16 years ago without the crater due to 2009 problem


Except for the part where that Fed Regime eased up and prolonged the recession, before they went back to raising rates. Jay Powell isn’t about to make that mistake, he has nothing to lose.


where you think he taking this?

Until the BOG says or does otherwise, exactly where they say they are taking it: up :arrow_up: (To the moon?) until inflation is at-or-near target. Now given the lag of monetary policy (12-18 months) will they ease up as they get closer to target (treating it like an asymptote)? Probably. That’s a late-2023 question at this pace.

What’s driving people crazy is checking the markets every 2 hours and wondering why something that takes months-and-months to play out hasn’t happened yet, why they haven’t changed strategy.


In other news, you can now finally finance the apple pencil.


Hope not - I love this type of threads :+1: :+1:

There are some questions about how this ends due to our different economic situation compared to early 1980s. At that point our unemployment rate was between 6% and 10%. How much can inflation be tamed while unemployment remains well below 4% since that portends ongoing wage growth. Also, in 1980 inflation wasn’t a huge global problem. Neither the DM or Yen (the next 2 biggest economies) were suffering from unusually high inflation. Now inflation is historically high in the Eurozone and UK.

But the most notable difference is the high inflation with a rapidly appreciating dollar. A situation that certainly didn’t exist in the early 1980s. At some point, if the dollar keeps appreciating inflation is gonna slow since imported consumer goods are going to become significantly cheaper.


You think unemployment is less? Or did they redefine how they track it?

The biggest issue with rates now is the national debt. We never had debt to gdp close to what it is now. So how is that paid at interest above where we’re at now? I know congress doesn’t care about a balanced budget but eventually that’s going to become an issue when we pay more in interest then the entire defense budget.


My parents were literally looking for change under the couch to put it in the bank lol.


If debt to gdp is your concern than was Carter or Clinton your guy?

Yeah paying down the debt would be good. Look what we did after WW2. Greatest generation fought the war then paid the taxes to pay for it all while winning the post war era too. But now Play with a budget simulator (ignoring one off Covid stimulus which has now run its course). I know a fair amount about government spending. Actual budget balancing/surplus producing/deficit paying down cuts require real sacrifice. Who is going to make that sacrifice?


Gov will always find ways to spend billions upon billions tax payer dollars. Right now it is a proxy war. Then once it is done, wait until you see how much money they want to send to rebuild what was destroyed.

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Yes massive cuts to our military would go a long way to solving our budget issues. Politically palatable?

Also foreign aid is a common complaint about government spending but that’s where budget calculator comes in. It’s under 1% of budget.

United States foreign aid - Wikipedia.