WTF Just Happened Today

Wednesday, June 15, 2022

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1/ The Federal Reserve raised interest rates by 75 basis points – the biggest increase since 1994 – to tackle the fastest inflation in four decades. Chairman Jerome Powell called the move “an unusually large one,” adding that he expects either a 50 basis point or 75 basis point increase at the Fed’s July meeting. Economic data showed that inflation unexpectedly rose to 8.6% in May. The Fed now expect prices to increase 5.2% in 2022, compared to an earlier forecast for 4.3%, with inflation dropping to 2.6% in 2023 – still above its 2% target rate. On average, Fed policymakers expect interest rates to rise to 3.4% by December, and 3.8% by the end of 2023 – up from the 1.9% they projected in March. And, as a result of its policies, the Fed now expects the unemployment rate to increase to 3.7% this year and to 4.1% by 2024. “We’re not trying to induce a recession now,” Powell said. “Let’s be clear about that. We’re trying to achieve 2% inflation.” (Wall Street Journal / New York Times / NPR / Associated Press / Bloomberg / Washington Post / CBS News / Politico)

• ???? WTF is inflation, the Fed, and interest rates: A normal person’s guide. The Federal Reserve’s goal is to keep prices stable and unemployment low. Inflation, however, has pushed prices up 8.6% in the past year. In response, the Fed is raising the federal funds rate to make borrowing money more expensive, which directly impacts things like credit card interest rates, new car loans, and mortgages. By raising rates, the Fed discourages consumer spending, which lowers demand, and allows prices to come down and stabilize over time. However, raising rates too high or too quickly could slow the economy too much, which could cause a recession and lead to layoffs. Fun times. (Washington Post)

2/ The FDA’s independent vaccine advisers voted unanimously to recommend the authorization of two Covid-19 vaccines for children as young as 6 months old. The FDA is expected to authorize the shots within days, with vaccinations beginning as early as June 21. Pfizer’s three-dose vaccine would cover children 6 months through 4 years old, while Moderna’s two-dose vaccine would cover children 6 months through 5 years old. Meanwhile, every state but Florida has pre-ordered Covid-19 vaccine doses for children under 5. Florida missed yesterday’s deadline to pre-order, guaranteeing a delay in access for parents in the state. (Politico / New York Times / McClatchy DC /