America’s imminent debt crisis: Much ado about nothing scary
1 year, 10 months ago

America’s imminent debt crisis: Much ado about nothing scary

Live Mint  

The ruckus in the US over the federal debt ceiling has redirected attention toward soaring public borrowing. Against the backdrop of monetary tightening by the US Federal Reserve, piling up more debt reinforces concern about the explosive growth of the government’s interest obligations. Currently, the interest rate on 10-year government bonds is 3.6%, while the CBO’s inflation forecast for that horizon is 2.4%, so the real interest rate relevant for calculating the interest burden is still only 1.2%. And as the former International Monetary Fund chief economist Olivier Blanchard reminds us in a new book, what matters is the difference between the real interest rate and the growth rate of the economy. If the real interest rate is lower than the growth rate of inflation-adjusted GDP, then the debt ratio can fall even when the government runs budget deficits.

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History of this topic

'Crisis is real': Analyst warns Trump of looming plight that could doom presidency
1 month ago

'Crisis is real': Analyst warns Trump of looming plight that could doom presidency

Raw Story  

Donald Trump managed to win a second term in large part due to the frustration of the electorate over prices — but there's a big economic crisis looming over the president-elect's head that could end up defeating him, Heather Long wrote for The Washington Post. Trump has boasted that under his presidency, people will be able to get 2 percent …

Sharply rising bond rates could stem Wall Street's 'relief rally' and push interest rate cuts further into the future
1 month, 2 weeks ago

Sharply rising bond rates could stem Wall Street's 'relief rally' and push interest rate cuts further into the future

ABC  

The apparent roar of approval was almost deafening. It's a world that, down the track, promises a return of inflation and permanently higher interest rates as America shifts to a more protectionist global stance that punishes China and, by extension, hurts Australia. Since mid-September, US money markets almost inexplicably have begun forecasting a rise in interest rates. The bond is …

How the economy will respond to the Fed's rate cuts
3 months ago

How the economy will respond to the Fed's rate cuts

Politico  

“Rate cuts going into the end of this year and the beginning of next year will help provide some momentum to the economy,” said Bharat Ramamurti, a former Biden White House official who’s now advising Harris’s campaign. “Very sharp and significant Fed rate hikes didn’t have the same effect on the economy that you would have expected,” said David Wessel, …

'Risk of major financial fallout' as IMF sounds the alarm on persistent global inflation
5 months, 1 week ago

'Risk of major financial fallout' as IMF sounds the alarm on persistent global inflation

ABC  

The message seems to have been lost in all the noise. The biggest risk is that higher American interest rates "disrupt capital flows and impede planned monetary policy easing, which could adversely impact growth". Even worse, "persistently high interest rates could raise borrowing costs further and affect financial stability if fiscal improvements do not offset higher real rates amid lower …

Federal Reserve signals that interest rate cuts aren’t imminent, leaving them unchanged for now
10 months, 3 weeks ago

Federal Reserve signals that interest rate cuts aren’t imminent, leaving them unchanged for now

LA Times  

Interest rate cuts are coming. “I don’t think it’s likely that the committee will reach a level of confidence by the time of the March meeting” to start cutting rates, Powell said at his news conference. The change in the Fed’s stance Wednesday comes as the economy is showing surprising durability after a series of 11 rate hikes helped drastically …

Inflation fall 'should kill off' any lingering interest rate rise risks
10 months, 3 weeks ago

Inflation fall 'should kill off' any lingering interest rate rise risks

ABC  

In short: Consumer prices rose just 0.6 per cent over the December quarter, the slowest pace since March 2021, and 4.1 per cent over the past year. Consumer prices rose just 0.6 per cent over the December quarter, the slowest pace since March 2021, and 4.1 per cent over the past year. Moreover, the Reserve Bank's preferred "trimmed mean" measure …

The Fed is probably done raising interest rates and could cut them next year
1 year ago

The Fed is probably done raising interest rates and could cut them next year

NPR  

The Fed is probably done raising interest rates and could cut them next year Enlarge this image toggle caption Kevin Dietsch/Getty Images Kevin Dietsch/Getty Images The Federal Reserve signaled it's probably done raising interest rates to curb inflation and the central bank could start cutting rates next year. "We're seeing inflation making real progress," Fed chairman Jerome Powell told reporters …

A Soft Landing in the U.S. Could Be Hard for Everyone Else
1 year, 2 months ago

A Soft Landing in the U.S. Could Be Hard for Everyone Else

Live Mint  

The U.S. economy might be heading for a soft landing. Surprising strength in the U.S. economy poses a threat to the rest of the world, portending higher interest rates for longer and a stronger dollar that will weigh on other countries’ growth. Fragmentation Strong U.S. economic data, including September’s blockbuster hiring report, helped send Treasury yields to 16-year highs as …

Higher Interest Rates Drive U.S. Economy Slowdown To 1.1% Rate
1 year, 7 months ago

Higher Interest Rates Drive U.S. Economy Slowdown To 1.1% Rate

Huff Post  

LOADING ERROR LOADING WASHINGTON — The U.S. economy slowed sharply from January through March, decelerating to just a 1.1% annual pace as higher interest rates hammered the housing market and businesses reduced inventories. Yet the central bank’s policymakers are aiming for a so-called soft landing: Cooling growth enough to curb inflation yet not so much as to send the world’s …

The Fed’s solution might be worse than the problem
2 years, 2 months ago

The Fed’s solution might be worse than the problem

Live Mint  

The Federal Reserve System, the central bank of the US, has increased its benchmark interest rate, from near zero in mid-March 2022 to 3-3.25% in late-September 2022, in five hikes over the past six months, and projections place it in the range of 4.5% by end-2022. Small Indian cinemas take on big Hollywood studios Contrasting Q2 stories of two tech …

How the Fed's steep rate hikes stand to affect your finances
2 years, 3 months ago

How the Fed's steep rate hikes stand to affect your finances

The Independent  

For free real time breaking news alerts sent straight to your inbox sign up to our breaking news emails Sign up to our free breaking news emails Sign up to our free breaking news emails SIGN UP I would like to be emailed about offers, events and updates from The Independent. Yet as the Federal Reserve has rapidly increased interest …

US Federal Reserve unleashes another big rate hike in bid to curb inflation
2 years, 4 months ago

US Federal Reserve unleashes another big rate hike in bid to curb inflation

Firstpost  

The central bank’s decision follows a jump in inflation to 9.1 per cent, the fastest annual rate in 41 years, and reflects its strenuous efforts to slow price gains across the economy Washington: The Federal Reserve on Wednesday raised its benchmark interest rate by a hefty three-quarters of a point for a second straight time in its most aggressive drive …

Here’s how higher rates will impact you
2 years, 7 months ago

Here’s how higher rates will impact you

CNN  

Editor’s Note: This is an updated version of a story that ran on March 17, 2022. High inflation – consumer prices rose in May at the fastest pace in 40 years – will likely force the Fed to raise interest rates several more times in the coming months. Still, the impact to borrowing costs in coming months will depend chiefly …

What happens if interest rates don't go up soon? The inflation 'genie' will be out of the bottle
2 years, 9 months ago

What happens if interest rates don't go up soon? The inflation 'genie' will be out of the bottle

ABC  

Australian economic policy is getting rather awkward. The Reserve Bank's cash rate target sits at 0.1 per cent — the lowest on record. Reasons for a higher cash rate target The Reserve Bank governor Philip Lowe recently said it was "plausible" the bank could raise the cash rate target later this year. The main policy tool to control inflation is …

Inflation fears are sparking a big drop in markets. Here are 3 things to know
2 years, 11 months ago

Inflation fears are sparking a big drop in markets. Here are 3 things to know

NPR  

Inflation fears are sparking a big drop in markets. Here are 3 things to know Enlarge this image toggle caption Spencer Platt/Getty Images Spencer Platt/Getty Images It's been a rough start of the year for Wall Street – and it keeps getting worse. The Federal Reserve has projected it will raise interest rates three times this year, which could raise …

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