• Today the Federal Reserve raised interest rates for the third time in 10 years
  • Of course, the tightening cycle began with the first rate hike in December of 2015
  • Followed by the second rate hike in December of last year
  • And now, breaking from tradition, rather than waiting an entire year for the third hike
  • We got the hike in March
  • Of course the Fed had allowed market expectations to rise to 100% in anticipation of this rate hike
  • When the Fed raised rates for the first time they talked about raising rates for an awfully long time before they actually got around to doing it
  • Ironically, though, about 2 hours earlier than the rate hike announcement, the Atlanta Fed revised down again its projection for Q1 GDP  to .9
  • Remember – at the beginning of February, not even 6 weeks ago, the Atlant Fed was at 3.4% for Q1 GDP
  • They’re down to .9%!  That is a huge collapse in estimates for economic growth in the first quarter
  • And I’m sure it portends ill for subsequent quarters
  • And remember – Janet Yellen has always said that the Federal Reserve is not on a preset course
  • And that rate hikes that they are forecasting will only happen to the extent that their economic forecast pans out
  • That all of their rosy expectations of economic recovery has come true
  • Yet none of it has come true
  • If anything, you’ve had a collapse in growth estimates since the last time the Fed met, yet
  • The collapse in GDP forecast has done nothing to alter the Fed’s path, because they’ve ignored all the data
  • And they raised interest rates yet again
  • That doesn’t mean that interest rates are high, I mean they’re still very low
  • Remember, we’re still not at a range between .75% and 1% so the average of that range, the midpoint, is still below 1%
  • 1% was the emergency level that Alan Greenspan slashed rates to, after the dot com bubble bust and after the September 11 terrorist attack sent the U.S. economy into recession
  • At that point, in a recession, the lowest rates got was 1%
  • The Fed would have to hike rates again to get back up there
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