Fun

Analysts Suspect the Fed Will Bump Federal Funds Rate by 75 bps Next Week, Others Predict the ‘Biggest Hike in Decades’

News Feed - 2022-07-21 01:07:24

Analysts Suspect the Fed Will Bump Federal Funds Rate by 75 bps Next Week, Others Predict the "Biggest Hike in Decades’


Following the recent U.S. consumer price index report that indicated inflation in America has reached a 40-year high, many expect the Federal Reserve to hike the benchmark interest rate by 75 to 100 basis points (bps) on July 26. Blackstone’s Private Wealth Solutions expects the Fed to raise the rate by 75 bps and bankrate.com believes a three-quarter rate hike is in the cards as well. All Eyes on the Fed’s Next Move — Market Strategists Predict a 75 to 100 bps Interest Rate Hike Next Week


Next week, roughly six days from now, the U.S. central bank will meet once again in order to assess and change the federal funds rate. The Federal Reserve has been hiking the benchmark rate since mid-March 2022. At that time in March, the central bank increased the benchmark interest rate from near zero to 0.25% for the first time since 2018. After the Fed did that, U.S. inflation continued to rise and JPMorgan economists predicted the central bank would raise the rate by 75 bps in June.


The rate hike forecast came to fruition as the U.S. central bank increased the federal funds rate by 75 bps on June 15, 2022. America had not seen a 75 bps jump since 1994 when Alan Greenspan served as the 13th chair of the Federal Reserve. At the time, the country was managed by Democrat president Bill Clinton and inflation was quite low at 2.7%. However, many observers at the time said Greenspan was often hawkish and market indices were becoming volatile.


Before Greenspan’s infamous 75 bps rate hike, the tech giant Cisco Systems saw a 16% decline in value and dropped 54% up until October 1994. Shares stemming from Applied Materials corrected by 30%, and EMC saw a similar decline. The investment strategist at Goldman Sachs, Abby Cohen, noted that close to 40% of all active stocks dropped more than 30% from the tops reached in 1994. Greenspan started to tighten monetary policy, and the investment strategist at Standard & Poor, Arnold Kaufman, said at the time that the U.S. economy would rebound in 1995.


“We don’t see this as a bear market,” Kaufman explained that year. “The difference is that we’re buying the ‘soft landing’ concept [for the economy], while others are not.”


Kaufman was correct, as the U.S. economy lifted and market indices were less volatile, and began to steadily rise in 1995. More than 27 years later, the 16th chair of the Federal Reserve, Jerome Powell, seems to be in a hawkish mode ever since the first rate hike in March. While inflation continues to print perpetual highs, Powell thinks that current price pressures will dissipate fast, and the central bank’s chair believes the Fed can tame the scorching hot inflation.


Blackstone and Bankrate.com Pencil in a 75 bps Rate Hike, Others Expect a 100 bps Jump


Currently, the chief investment strategist in Blackstone’s Private Wealth Solutions group, Joseph Zidle, believes a 75 bps rate hike will happen next week. “My own view is the Fed funds rate could exceed 4%. I think they could go above 4.5%, maybe even closer to 5%,” Zidle told Bloomberg during an interview. In addition to Blackstone’s guess, bankrate.com is also predicting a 75 bps increase during the next Fed meeting. Bankrate.com says that the U.S. central bank’s policymakers “show no signs of stopping.” The financial bank rate comparison website added: Fresh forecasts also released with the June decision show projections for a 3.25-3.5 percent federal funds rate by the end of 2022, the highest since 2008.


Meanwhile, there are plenty of higher predictions as well, as some believe a 100 bps increase could very well happen. “With inflation so hot, the Fed’s next rate hike might be the biggest in decades,” a report published by Barron’s notes and details the next rate bump could be 1%. Furthermore, other sources stemming from the likes of CBS, and CNBC, indicate that a 100 bps raise will be announced next Wednesday at the Federal Open Market Committee’s (FOMC) monthly meeting. Tags in this story 100 bps, 1994, 1995, 75 bps, Alan Greenspan, Arnold Kaufman, Bank Rate, Bankrate.com, Benchmark Rate, Bill Clinton, Blackstone, Fed, Federal Funds Rate, Federal Rate, Federal Reserve, hot inflation, inflation, Joseph Zidle, June decision, Standard & Poor, taming inflation, US Central Bank


What do you think the Fed will do during the next FOMC meeting? Do you expect a 75 bps or 100 bps increase next week? Let us know your thoughts about this subject in the comments section below. Jamie Redman


Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 5,700 articles for Bitcoin.com News about the disruptive protocols emerging today. Report: Bank of Spain Worried About Inflation and Its Consequences in Latam ECONOMICS | 2 days ago White House Reporter Says Inflation Has Become "Biden"s Political Nightmare" as Critics Slam Government Spending ECONOMICS | 3 days ago


Image Credits: Shutterstock, Pixabay, Wiki Commons Previous articleBiggest Movers: DOGE, ADA Move to Multi-Week Highs on Wednesday Next articleExplore the Value Behind KCC Through KCC Validator Election Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article. Read disclaimerShow comments More Popular NewsIn Case You Missed ItSEC Risks Violating Admin Procedure Act by Rejecting Spot Bitcoin ETFs, Says Grayscale


Grayscale Investments" CEO explains that the U.S. Securities and Exchange Commission (SEC) could potentially violate the Administrative Procedure Act by not approving a spot bitcoin exchange-traded fund (ETF). SEC Approving Spot Bitcoin ETF Is "a Matter of When and Not ... read more.Bitcoin ATM Operator Indicted in New York Allegedly Running Illegal Business Attracting Criminals UAE Airliner Emirates to Launch NFTs and Experiences in the Metaverse Fed"s Bullard Wants to Raise Bank Rate to 3.5% by Year"s End, Hints at 75 Basis Point Rate Hike Microbt Reveals Latest Bitcoin Mining Rigs — Machines Produce up to 126 TH/s With Custom 5nm Chip Design

News Feed

Crypto Market Slides as Total Value Locked in Defi Falls Below $50 Billion Mark
Crypto Market Slides as Total Value Locked in Defi Falls Below $50 Billion Mark The value of the crypto market has started to slide again after a bullish run-up over the last seven
XRPayNet – the World’s Most Diverse Payment Network, Bringing ‘Buy Now, Pay Later’ to the Crypto Industry
XRPayNet - the World"s Most Diverse Payment Network, Bringing ‘Buy Now, Pay Later" to the Crypto Industry press release PRESS RELEASE. XRPayNet is a cryptocurrency built on the XR
Over $122M Bitcoin longs liquidated as BTC falls below $61K
Zoltan Vardai10 hours agoOver $122M Bitcoin longs liquidated as BTC falls below $61KThe incoming selling pressure from the Mt. Gox repayment could still cause Bitcoin’s price to fall below the psychological $60,000 mar
Amaka Nwaokocha1 hour agoElon Musk’s X platform faces backlash over XRP account suspensionCrypto Eri, a prominent figure in the cryptocurrency community, contacted Elon Musk on X, seeking clarification about the accoun
Lookonchain oopsie? The $2B of ETH was sold back in 2021 — EmberCN
Tom Mitchelhill7 hours agoLookonchain oopsie? The $2B of ETH was sold back in 2021 — EmberCNLookonchain shared that Plus Token had begun moving nearly $2 billion in ETH but it turns out most of it had already been sold
Brazilian Crypto Investment Platform Bluebenx Backpedals on Hack Reports, States It Was Victim of a Listing Scam
Brazilian Crypto Investment Platform Bluebenx Backpedals on Hack Reports, States It Was Victim of a Listing Scam Bluebenx, a Brazilian crypto company that recently stopped customer
‘Ultra Sound’ Money — Simulation Shows Ethereum’s Inflation Rate Is Significantly Lower Using Proof-of-Stake
"Ultra Sound" Money — Simulation Shows Ethereum’s Inflation Rate Is Significantly Lower Using Proof-of-Stake Its been 105 days since Ethereum transitioned from a proof-of-work
Prashant Jha3 hours agoOver $204M lost to DeFi hacks and scams in Q2: Finance RedefinedThe top 100 DeFi tokens didn’t see much change in price over the past week, with the majority posting minor weekly gains.576 Total
Jesse Coghlan7 hours agoDubai crypto regulator suspends BitOasis crypto exchange licenseBitOasis was the first crypto exchange to get an operating license in Dubai, which the local regulator has now suspended for not mee
World’s Largest Banks Losing Stock Value During Weeks Marked by Pandemic
World’s Largest Banks Losing Stock Value During Weeks Marked by Pandemic The spreading coronavirus infection is taking a toll on the global economy and traditional financial in
Ethereum’s Transition to Proof-of-Stake Yields Deflationary Results
Ethereum"s Transition to Proof-of-Stake Yields Deflationary Results After the transition from proof-of-work (PoW) to proof-of-stake (PoS), Ethereum’s annual issuance rate ha
Argentinian Central Bank to Lift Freeze on Bank Fee Increases: Sets the Ceiling for Future Hikes at 9%
Argentinian Central Bank to Lift Freeze on Bank Fee Increases: Sets the Ceiling for Future Hikes at 9% The Central Bank of the Argentine Republic says starting i