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Several Federal Reserve officials are open to at least one more interest rate hike in the coming months to cool inflation.
Several top policymakers have publicly spoken in favor of returning to the hawkish policy of the previous year at the next meeting in June, reported Fox Business.
However, the central bank has come under increasing fire for raising recession risks by aggressively boosting interest rates, which has caused worries on Wall Street regarding a deep recession.
Many top CEOs and economists have criticized the Fed’s decision making in recent weeks and for not acting early enough when price pressures were still building.
The Fed raised the borrowing rate for the tenth consecutive time to 5 to 5.25 percent in May, the highest since 2007. Still, inflation unexpectedly jumped 0.4 percent to 4.9 percent in April after months of declines.
The U.S. inflation rate is more than twice the Fed’s 2 percent target but well below the peak of 9.1 percent in June 2022. The labor market also remains tight, with unemployment falling to 3.4 percent last month, the lowest rate since 1969.
After prematurely stating that inflation was getting under control earlier this year, Fed policymakers have warned that inflation was still too high for a pause in the central bank’s tightening campaign, despite pleas from some economists to take a wait-and-see approach.
Despite the recent declines in inflation, some central bank officials say that another hike is increasingly likely.
“I think we’re going to have to grind higher with the policy rate in order to put enough downward pressure on inflation and to return inflation to target in a timely manner,” St. Louis Federal Reserve President James Bullard said in a Monday speech delivered to the American Gas Association in Florida.
“I’m thinking two more moves this year—exactly where those would be this year I don’t know—but I’ve often advocated sooner rather than later.”
Dallas Fed President Lorie Logan agreed that inflation was “much too high” and not cooling quickly enough to justify a pause in interest rate hikes at the Fed monetary policy meeting in June.
“After raising the target range for the federal funds rate at each of the last 10 FOMC meetings, we have made some progress,” she said in remarks prepared for delivery to the Texas Bankers Association in San Antonio.
“The data in coming weeks could yet show that it is appropriate to skip a meeting. As of today, though, we aren’t there yet.”
Minneapolis Fed President on the Fence
Minneapolis Fed President Neel Kashkari, a member of the Federal Open Market Committee, told CNBC on May 23 that although he is open to pausing interest rates at the next policy meeting, he is still open to a rate hike.
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He stated that would not take future rate hikes off the table, even if officials choose to pause the increases next month.
“I think right now it’s a close call, either way, versus raising another time in June or skipping,” he said during the interview with CNBC.
“What’s important to me is not signaling that we’re done,” he said, adding, “if we were to skip in June, that does not mean we’re done with our tightening cycle; it means to me we’re getting more information. Do we then start raising again in July, potentially?”
“The cost of not getting inflation down to 2 percent is much higher to Main Street than the cost of getting it down to 2 percent,” Kashkari continued.
“So I would rather err on being a little bit more hawkish rather than regretting it and having been too dovish.”
However, he said he was sensitive to the delayed impact of the Fed’s rapid rate increases and a potential credit crunch due to the ongoing banking crisis, which began in March.
These latest comments from top Fed officials have raised the probability of an 11th rate hike in June, even though investors have bet on the Fed taking a break from raising rates for that month. However, the probability that the Fed will raise rates in June rose to 26.8 percent yesterday, up from 17.4 percent the previous week, according to data from CME Group’s FedWatch.
Powell Faces Critics
Meanwhile, Fed Chairman Jerome Powell told the Perspectives on Monetary Policy panel at the Thomas Laubach Research Conference on May 19 that the Fed funds rate may not need “to rise as much” to achieve its inflation goals but agreed that prices were still too high.
After the last meeting in early May, Powell said that the Fed may decide not to raise rates so to better study the effects of the rapid increases.
“A decision on a pause was not made today,” said Powell, reiterated that the Fed’s future policy decisions would “be driven by incoming data, meeting to meeting.”
Powell said that the tightening of credit standards after the recent bank failures could weigh on economic growth, hiring, and inflation but that the Fed’s financial stability tools can calm any volatility in the banking system.
Powell said that “overall the banks and the banking system are strong and resilient,” but acknowledged that the disruption to the financial sector from the series of bank runs could impact the central bank’s policy decisions. The chairman has been repeatedly attacked for misjudging the rise in inflation as “transitory” in 2021.
He was then forced to go on the aggressive interest rate hike spree within months of such a stance, as consumer prices rose at the fastest pace since the early 1980s.
Musk Weighs In
“My concern with the way that the Federal Reserve is making decisions is that they are just operating with too much latency,” Twitter CEO Elon Musk and a major critic of Powell, told CNBC on May 23.
“Basically, the data is somewhat stale, so the Fed was slow to raise interest rates. And now I think they’re going to be slow to lower them.”
Musk called the Fed’s rate hikes a ‘brake pedal’ on the economy that is making things too expensive for those using credit, which will have “downstream effects” on the economy.
Mohamed El-Erian, chief economic adviser at Allianz, told Bloomberg on May 23 that “we are still in the hospital because there are problems with the banking model of certain banks.”
El-Erian is concerned over the situation faced by regional American banks and is opposed to pushing ahead with another strong rate hike too quickly, which will hit businesses tied to the commercial real estate industry.
“The key issue now is to allow the patients that are in the hospital to come out. If there’s another [Fed] policy mistake, the patient goes back into the ICU,” he added.
Article cross-posted from our premium news partners at The Epoch Times.
Five Things New “Preppers” Forget When Getting Ready for Bad Times Ahead
The preparedness community is growing faster than it has in decades. Even during peak times such as Y2K, the economic downturn of 2008, and Covid, the vast majority of Americans made sure they had plenty of toilet paper but didn’t really stockpile anything else.
Things have changed. There’s a growing anxiety in this presidential election year that has prompted more Americans to get prepared for crazy events in the future. Some of it is being driven by fearmongers, but there are valid concerns with the economy, food supply, pharmaceuticals, the energy grid, and mass rioting that have pushed average Americans into “prepper” mode.
There are degrees of preparedness. One does not have to be a full-blown “doomsday prepper” living off-grid in a secure Montana bunker in order to be ahead of the curve. In many ways, preparedness isn’t about being able to perfectly handle every conceivable situation. It’s about being less dependent on government for as long as possible. Those who have proper “preps” will not be waiting for FEMA to distribute emergency supplies to the desperate masses.
Below are five things people new to preparedness (and sometimes even those with experience) often forget as they get ready. All five are common sense notions that do not rely on doomsday in order to be useful. It may be nice to own a tank during the apocalypse but there’s not much you can do with it until things get really crazy. The recommendations below can have places in the lives of average Americans whether doomsday comes or not.
Note: The information provided by this publication or any related communications is for informational purposes only and should not be considered as financial advice. We do not provide personalized investment, financial, or legal advice.
Secured Wealth
Whether in the bank or held in a retirement account, most Americans feel that their life’s savings is relatively secure. At least they did until the last couple of years when de-banking, geopolitical turmoil, and the threat of Central Bank Digital Currencies reared their ugly heads.
It behooves Americans to diversify their holdings. If there’s a triggering event or series of events that cripple the financial systems or devalue the U.S. Dollar, wealth can evaporate quickly. To hedge against potential turmoil, many Americans are looking in two directions: Crypto and physical precious metals.
There are huge advantages to cryptocurrencies, but there are also inherent risks because “virtual” money can become challenging to spend. Add in the push by central banks and governments to regulate or even replace cryptocurrencies with their own versions they control and the risks amplify. There’s nothing wrong with cryptocurrencies today but things can change rapidly.
As for physical precious metals, many Americans pay cash to keep plenty on hand in their safe. Rolling over or transferring retirement accounts into self-directed IRAs is also a popular option, but there are caveats. It can often take weeks or even months to get the gold and silver shipped if the owner chooses to close their account. This is why Genesis Gold Group stands out. Their relationship with the depositories allows for rapid closure and shipping, often in less than 10 days from the time the account holder makes their move. This can come in handy if things appear to be heading south.
Lots of Potable Water
One of the biggest shocks that hit new preppers is understanding how much potable water they need in order to survive. Experts claim one gallon of water per person per day is necessary. Even the most conservative estimates put it at over half-a-gallon. That means that for a family of four, they’ll need around 120 gallons of water to survive for a month if the taps turn off and the stores empty out.
Being near a fresh water source, whether it’s a river, lake, or well, is a best practice among experienced preppers. It’s necessary to have a water filter as well, even if the taps are still working. Many refuse to drink tap water even when there is no emergency. Berkey was our previous favorite but they’re under attack from regulators so the Alexapure systems are solid replacements.
For those in the city or away from fresh water sources, storage is the best option. This can be challenging because proper water storage containers take up a lot of room and are difficult to move if the need arises. For “bug in” situations, having a larger container that stores hundreds or even thousands of gallons is better than stacking 1-5 gallon containers. Unfortunately, they won’t be easily transportable and they can cost a lot to install.
Water is critical. If chaos erupts and water infrastructure is compromised, having a large backup supply can be lifesaving.
Pharmaceuticals and Medical Supplies
There are multiple threats specific to the medical supply chain. With Chinese and Indian imports accounting for over 90% of pharmaceutical ingredients in the United States, deteriorating relations could make it impossible to get the medicines and antibiotics many of us need.
Stocking up many prescription medications can be hard. Doctors generally do not like to prescribe large batches of drugs even if they are shelf-stable for extended periods of time. It is a best practice to ask your doctor if they can prescribe a larger amount. Today, some are sympathetic to concerns about pharmacies running out or becoming inaccessible. Tell them your concerns. It’s worth a shot. The worst they can do is say no.
If your doctor is unwilling to help you stock up on medicines, then Jase Medical is a good alternative. Through telehealth, they can prescribe daily meds or antibiotics that are shipped to your door. As proponents of medical freedom, they empathize with those who want to have enough medical supplies on hand in case things go wrong.
Energy Sources
The vast majority of Americans are locked into the grid. This has proven to be a massive liability when the grid goes down. Unfortunately, there are no inexpensive remedies.
Those living off-grid had to either spend a lot of money or effort (or both) to get their alternative energy sources like solar set up. For those who do not want to go so far, it’s still a best practice to have backup power sources. Diesel generators and portable solar panels are the two most popular, and while they’re not inexpensive they are not out of reach of most Americans who are concerned about being without power for extended periods of time.
Natural gas is another necessity for many, but that’s far more challenging to replace. Having alternatives for heating and cooking that can be powered if gas and electric grids go down is important. Have a backup for items that require power such as manual can openers. If you’re stuck eating canned foods for a while and all you have is an electric opener, you’ll have problems.
Don’t Forget the Protein
When most think about “prepping,” they think about their food supply. More Americans are turning to gardening and homesteading as ways to produce their own food. Others are working with local farmers and ranchers to purchase directly from the sources. This is a good idea whether doomsday comes or not, but it’s particularly important if the food supply chain is broken.
Most grocery stores have about one to two weeks worth of food, as do most American households. Grocers rely heavily on truckers to receive their ongoing shipments. In a crisis, the current process can fail. It behooves Americans for multiple reasons to localize their food purchases as much as possible.
Long-term storage is another popular option. Canned foods, MREs, and freeze dried meals are selling out quickly even as prices rise. But one component that is conspicuously absent in shelf-stable food is high-quality protein. Most survival food companies offer low quality “protein buckets” or cans of meat, but they are often barely edible.
Prepper All-Naturals offers premium cuts of steak that have been cooked sous vide and freeze dried to give them a 25-year shelf life. They offer Ribeye, NY Strip, and Tenderloin among others.
Having buckets of beans and rice is a good start, but keeping a solid supply of high-quality protein isn’t just healthier. It can help a family maintain normalcy through crises.
Prepare Without Fear
With all the challenges we face as Americans today, it can be emotionally draining. Citizens are scared and there’s nothing irrational about their concerns. Being prepared and making lifestyle changes to secure necessities can go a long way toward overcoming the fears that plague us. We should hope and pray for the best but prepare for the worst. And if the worst does come, then knowing we did what we could to be ready for it will help us face those challenges with confidence.
