Analysts believe the Fed will raise the federal funds rate by 75 basis points next week, while others predict the ‘largest hike in decades.’

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Last Updated on July 21, 2022 by Bitfinsider

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. Since mid-March 2022, the Federal Reserve has been raising the benchmark rate. For the first time since 2018, the central bank raised the benchmark interest rate from near zero to 0.25 percent in March. Following the Fed’s action, US inflation continued to rise, and JPMorgan economists predicted the central bank would raise rates by 75 basis points in June.

The rate hike forecast came true when the Federal Reserve raised the federal funds rate by 75 basis points on June 15, 2022. A 75 basis point increase had not occurred in the United States since 1994, when Alan Greenspan was the 13th chairman of the Federal Reserve. At the time, the country was led by Democrat Bill Clinton, and inflation was relatively low at 2.7 percent. Many observers at the time, however, said Greenspan was frequently hawkish, and market indices were becoming volatile.

Prior to Greenspan’s infamous 75 basis point rate hike, the value of the tech giant Cisco Systems fell by 16 percent and dropped by 54 percent until October 1994. Applied Materials shares fell by 30%, and EMC shares fell by a similar amount. Abby Cohen, a Goldman Sachs investment strategist, noted that nearly 40% of all active stocks had dropped more than 30% from their peak in 1994. Greenspan began to tighten monetary policy, and Arnold Kaufman, an investment strategist at Standard & Poor’s, predicted that the US economy would recover in 1995.

Currently, Joseph Zidle, the chief investment strategist in Blackstone’s Private Wealth Solutions group, predicts a 75 basis point rate hike next week. “In my opinion, the Fed funds rate could rise above 4%.” “I believe they can go above 4.5 percent, perhaps even closer to 5 percent,” Zidle told Bloomberg in an interview. In addition to Blackstone’s prediction, bankrate.com predicts a 75 basis point increase at the next Fed meeting. According to Bankrate.com, the US central bank’s policymakers “show no signs of slowing down.”

Meanwhile, there are numerous higher forecasts, with some predicting a 100 basis point increase. “With inflation so high, the Fed’s next rate hike could be the biggest in decades,” a Barron’s report notes, adding that the next rate hike could be 1%. Furthermore, other sources, including CBS and CNBC, indicate that a 100 basis point increase will be announced next Wednesday at the Federal Open Market Committee’s (FOMC) monthly meeting.


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Disclaimer: The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, legal, tax or other advice. Investing in or trading cryptocurrency or stocks comes with a risk of financial loss.


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Disclaimer: The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, legal, tax or other advice. Investing in or trading cryptocurrency or stocks comes with a risk of financial loss.

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