Financial Warlock (she’s no damn Wizard), Janet Yellen, announced today that the FED would be slowing down the speed of the US Federal Reserve’s planned interest rate hikes for the remainder of 2016. Unless you’ve been on planet Mars (Earth To Matilda) for the past financial year, the issue of interest rate hikes have been a majahhh topic son for the past few years.
Ok ok, quick primer for y’all:
The Federal Reserve Bank of The United States of America:
Central banking system of the United States that dictates the volume of available money (by printing cash), and interest rates for the loan market. Technically the mission is to: Stabilize Employment, Moderate Interest Rates, and Stabilize Prices. HOWWWWEVVVAAA: the Fed currently operates as a tool of the Obama Administration to inflate the stock market via quantitative easing while keeping interest rates at historic lows. This allows people to skate away with shitty credit because it’s cheap as fuck to borrow.
Which is why the FED is now realizing the economy isn’t stable enough for America to handle the interest rate hikes (the cost of borrowing) that they initially wanted to implement. At the end of the day, the FED will only increase global interest rates by 50bps or 0.5% by the end of 2016. The long-term goal of the FED is to get the interest rate at 2.0% at some point within the next 3 years.
FYI, here are some reasons that the FED has decided to slow down the rate of borrowing-cost increases:
- Overall weak global economic growth.
- Dangerously low inflation rates.
- High-yield credit issues.
- Political foreign affair issues (which they won’t admit).
- Stock market slumping (which they won’t admit).
Peep this chart, bruh: the interest rate expectations from the FED following the big announcement today (courtesy of Bloomberg):
Peep this chart, bruh: the stock market was VERRRYYY PLEASED to find out that borrowing cost would remain low. It would be appropriate to call this a “bounce”.