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The US isn’t the only one raising interest rates…!
RT:
The Bank of England has raised its base rate from 0.75% to 1% on Thursday, in an attempt to curb soaring inflation that is predicted to surpass 10% by the year end.
The measure has sent the cost of borrowing to its highest level since February 2009.
The regulator has warned that the cost-of-living crisis could plunge the economy into recession this year. Last month inflation in the UK rose to 7% – the highest rate in 30 years, driven by rising fuel costs against the backdrop of the Ukraine-related sanctions on Russia. The Bank’s official target for this year was set at 2%.
The development sent the British pound plunging to its lowest level since July 2020, as the currency hit 1.2393 against the dollar early Thursday afternoon London time, shedding nearly 2% of its value against the greenback.
Raising interest rates might have done something in like, 2009-10. At this point, all it is going to do is wreck the economy even worse than it already is wrecked. Everyone knows that.
Of course, there is no way to save it either way, and eventually, the entire global financial system is going to have to default through inflation, and be replaced with a “great reset” new economic order. But raising interest rates now just hurts the markets. It could outright collapse the markets.
Year to date, the three major American stock indexes – the Dow, the S&P 500 and the Nasdaq Composite – have dropped 4.4%, 7% and 12% respectively as a result 0f some spooky “belt tightening.”
This is happening at the same time as the US is pushing this disastrous and disastrously expensive war against Russia – which comes directly on the heels of the massive money-printing fiasco that was the coronavirus hoax.
For those who missed yesterday’s white knuckle session, the US central bank raised the benchmark rate by a half percentage point on Wednesday, the steepest increment since 2000, in order to keep inflation under control. By ruling out a more aggressive hike, the central bank gave a boost to equity markets, with the S&P 500 posting its biggest daily advance since 2020. The Nasdaq 100 closed 3.4% higher, but is still down 17% this year.
“We are puzzled why the market thinks that Fed hikes are going to stop inflation,” said Nancy Davis, founder of Quadratic Capital Management. “We see inflation as driven by massive government spending, supply chain disruptions and, more recently, by Russia’s invasion of Ukraine.”
Sure, the Fed is powerless to do anything against inflation, but it has to do something. Policy makers are trying to juggle the need to quell the fastest inflation in four decades against hard-won economic growth. In Europe, German factory orders plummeted, highlighting the toll from the war. The soaring price of commodities further complicates efforts to subdue price pressures.
“The combination of high inflation and a weakening global economic outlook has fueled concerns about how far central banks will be able to raise interest rates without overburdening the economy,” Fraser Lundie, head of public fixed income markets at Federated Hermes, wrote in a note to clients.
These people are not even good at great resetting you.
