Fed's Barr signals more rate hikes needed; markets price 71% odds for October move
Federal Reserve Governor Michael Barr said further increases are likely necessary to reach the 2% inflation target, as hot business activity data pushes market expectations.
What to know
- Fed Governor Michael Barr signaled further rate hikes will likely be necessary to bring inflation to the 2% target, with market pricing now at 71% odds for an October increase.
- S&P Global's PMI data showed U.S. business activity surging to its fastest pace in over five years, but accompanied by the steepest input cost increases since October 2022, driven by fuel and freight expenses.
- The 2-year Treasury yield surged more than 13 basis points to 4.9% following the hawkish signals and hot inflation data.
The dispute Whether rate hikes are necessary medicine for inflation or reckless tightening that risks economic collapse—and which risk (recession or runaway inflation/debt) poses greater danger to ordinary people. · positions read across 8 posts and comments
Rate hikes risk tanking the economy and triggering recession; tightening during fragile conditions is economically destructive.
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“Tanking the economy is worse. People voted for this, gotta wait it out. But you can't cause a recession just because inflation is 3% instead of 2%. How are you gonna buy food if unemployment explodes?”
Cautious-Lecture-858 · Reddit ↗
Fed tightening is necessary; uncontrolled inflation and the nation's massive debt are greater dangers than rate hikes.
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“Wait for what? 5% inflation? 10% inflation? Maybe the US shouldn't have 40 trillion in debt in the first place you think?”
Mudfry · Reddit ↗
Fed policy is fundamentally irrational and reflects broader systemic stupidity in American economic leadership.
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“USA policy is to push inflation higher, and pretend that interest rates should go lower. How simple do we have to say it, and show how stupid you are in America?”
ShortNefariousness2 · Reddit ↗
“Risks to achieving our inflation target have increased, while risks to the labor market have receded.”
Michael Barr, Federal Reserve Governor · Quartz ↗ · Sep 22
Michael Barr Federal Reserve Governor
Susan Collins Boston Federal Reserve PresidentAlberto Musalem St. Louis Federal Reserve PresidentChris Williamson Chief Business Economist, S&P Global Market Intelligence
How it unfolded 2 developments, newest first · click a bar or a number to jump articlespostscomments
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Markets move sharply, pricing 71% probability of October Fed hike
Traders assigned a 71% probability to a rate hike at the October 27-28 FOMC meeting following Barr's remarks and the hot PMI data. The policy-sensitive 2-year Treasury yield surged by more than 13 basis points, reaching 4.9%.
“In my base case, further policy adjustments are likely to be needed to ensure inflation comes down to target in a timely fashion.”
— Michael Barr, Federal Reserve Governor · source -
first by Quartz, 11h ago
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first by CNBC, 12h ago
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Tanking the economy is worse. People voted for this, gotta wait it out. But you can’t cause a recession just because inflation is 3% instead of 2%. How are you gonna buy food if unemployment explodes? The economy is on the brink, completely hidden by the AI debt-laden circular economy. What do you think will happen when you make it harder for the…
2 more of the top 3 · 8 posts in this stretch
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Wait for what? 5% inflation? 10% inflation? Maybe the US shouldn't have 40 trillion in debt in the first place you think? But if you're so scared of the debt, you can sleep tight at night we would need $160+ trillion in debt before ~99.999% of tax revenues go to interest payments.
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USA policy is to push inflation higher, and pretend that interest rates should go lower. How simple do we have to say it, and show how stupid you are in America? I can't imagine a world where stupidity I'd this endemic in a population.
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background
S&P Global PMI data shows business activity surging with steep input cost increases — S&P Global released flash purchasing managers' index data showing September's composite PMI reached 58.4, a 62-month high, with the services gauge at 58.7 (59-month high) and manufacturing at 57.0 (52-month peak). Aggregate input costs climbed to their steepest point since October 2022, attributed to surging fuel and freight expenses alongside broader wage growth.
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Barr signals further rate hikes will likely be necessary
Federal Reserve Governor Michael Barr said in prepared remarks at a Federal Reserve Bank of Chicago housing affordability conference that further policy adjustments are likely needed to bring inflation to target, describing the prior week's quarter-point increase as an 'important action' and noting the committee had been 'out of position' on rates.
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background
Reddit users debate economic risks of rate hikes versus inflation and debt concerns — Users debated whether rate hikes risk tanking the economy or whether higher inflation and the nation's debt burden pose greater dangers. Some voiced concern that raising rates during weak economic conditions could trigger recession and spike unemployment, while others argued inflation above the 2% target and the nation's $40 trillion debt require aggressive tightening.
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background
Federal Reserve raises policy rate for first time in three years — The Fed raised its benchmark policy rate to a target range of 3.75%-4%, marking its first increase in three years.
What people are saying 5 voices from 1 site · best of 8 · verbatim
- Yesterday
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If you don’t know why cutting rates is bad, just look at Turkey. Let the adults do the work kiddo; you’re way over your head
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yes that is the point to slow economic activity, sucks for everyone but blame the people that got us in this fiscal mess and it isn't the Fed
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I mean if you ignore whether people can buy food. Also, it prevents all future spending because the currency is worthless. I feel like you may be economically illiterate.
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No, it’s not. It helps the US pay less interest on its sovereign debt. Just wait for the war to be over, there’s no need to tank the world’s economy.
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I don’t understand what they’re doing, they’re gonna destroy the economy, worse, they’re gonna tank the stock market.