FED Raises Rates: Biggest Hike Since 2000

    Photo: Getty Images [via Business Insider]

    The Facts

    • On Wed., the Federal Reserve ("Fed") raised its benchmark interest rate by 0.5 percentage points, marking the sharpest increase since 2000.

    • The increase was unanimously approved by the committee's ten voting members and will raise the target range for the federal funds rate to 0.75–1%.


    The Spin

    Establishment-critical narrative

    The Fed's goal to dampen inflation without inducing a recession - known as a "soft-landing" - is a pipe dream. The central bank waited too long to start cooling inflation and is now overcompensating, which runs the risk of slowing the economy so much that it shrinks.

    Pro-establishment narrative

    There is broad consensus among Fed bankers and economists that it's time for some quantitative tightening to rein in inflation, and the market is breathing a sigh of relief after the latest announcement. While the process of bringing down inflation is not pain-free, the economy is strong and a recession isn't likely.

    Nerd narrative

    There is a 66% chance that the US will enter a recession before Jan. 2024, according to the Metaculus prediction community.


    Establishment split

    CRITICAL

    PRO

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