What the Fed’s 25 Basis Point Rate Hike Means For You

[Inside Wall Street with Nomi Prins]( Welcome to Inside Wall Street with Nomi Prins! It’s the only daily newsletter featuring the insights of Nomi Prins and her team of global experts. You’ll find all our issues [here](. And if you have questions or comments, shoot us a note anytime [here]( or at feedback@rogueeconomics.com. What the Fed’s 25 Basis Point Rate Hike Means For You By Nomi Prins, Editor, Inside Wall Street with Nomi Prins Greetings from Washington, D.C. I’ve been in our nation’s capital this week for meetings with Congresspeople and senior staffers. I’ve met with them regarding topics ranging from infrastructure to shareholders’ rights. [image]Nomi at the Capitol Building in Washington, D.C. this week But the main thing that brought me here was the Fed’s Federal Open Market Committee (FOMC) meeting that took place on Tuesday and Wednesday. It was a pivotal one. The Fed had not raised interest rates since 2018. But in January, with U.S. inflation at 7%, Fed Chair Jerome Powell telegraphed its intention to raise rates by up to 50 basis points at the March meeting. This stance softened slightly in recent weeks. Powell announced that he was “inclined to propose and support a 25-basis-point rate hike.” And he hedged his bets by saying the Fed would “proceed carefully as we learn more about the implications of the Ukraine war for the economy.” So this week, the world watched to see what the Fed would do… Would it raise rates by 50 basis points to put the brakes on runaway inflation? Or would it raise rates by only 25 basis points? Or… would it announce a delay in its rate hike plans? As [I told you earlier this week]( I always believed the Fed would only raise rates by 25 basis points at this meeting. And that’s exactly what happened. Recommended Link [Crisis investing expert says buy these 4 things right now]( [image]( Crisis investing expert Dave Forest went “rogue” inside a chain store to expose the truth about why shelves are empty all over the country. “We could soon go from empty shelves… to empty wallets…and history shows we may only have days to act.” [Watch his urgent on-location video report now.]( -- The Fed’s Unofficial Mandate There’s one key reason the Fed can’t raise rates by any more than that right now. But it isn’t to do with the situation in Ukraine and the uncertainty that has created in global economies. It’s because of the [distortion between the markets and the real economy]( I’ve been writing to you about. The Fed (and other major central banks) has created that distortion through its easy-money policies. The roughly $5 trillion the Fed has created since the pandemic began in 2020 has acted as a turbo boost to markets. The S&P 500 is up nearly 95% from its March 2020 low. But the average American is still trying to recover from the damage caused to his livelihood during the pandemic-related shutdowns. [Featured: Disturbing footage from inside retail super chain (not Walmart)]( The Fed’s easy-money policy has implications for your money. I’ll get to that in a second. But first, realize this: Officially, the Fed has a dual mandate. The first part of its mandate is to maintain price stability (or fight inflation). The second is to attain full employment. But I believe it has a third – unofficial – mandate. That is to protect the markets. Recommended Link [Teeka’s Confession: “I Was Wrong”]( [image]( Teeka Tiwari, who was voted the #1 most trusted crypto expert, just made a shocking confession. After so many correct predictions, he admitted he was wrong about [this new digital asset.]( If you have any money in crypto, I urge you to see this confession caught on camera because it could have a major impact on your financial future. [Click here to watch the confession.]( -- Too Little, Too Late One way it does this is through a policy of low interest rates. The Fed set interest rates at effectively zero percent in the wake of the financial crisis of 2008. It has tread softly on rate hikes ever since. [Chart] It raised rates once in December 2015… once in December 2016… three times in 2017… and four times in 2018. All of these were increments of 25 basis points. In July 2019, economic growth around the world was slowing down. So the Fed pivoted to cutting rates. It announced three rate cuts in 2019. And two further cuts in March 2020, which effectively brought it back to zero. Yes, inflation was lower then than it is right now. But the Fed got it totally wrong when it characterized inflation as “transitory” early last year. And the reality is that it is too late now to contain that inflation. It’s simply too little, too late. So now, if it raises rates too quickly or by too much, it runs the risk of creating too much market volatility. You see, the Fed will always err on the side of not disrupting the markets, regardless of what happens to inflation or the economy. Its actions yesterday don’t change how it keeps markets awash in cheap money at all. [Featured: WARNING: Shocking new trend ripping through America]( Fed Won’t Shrink Its Asset Book Another way the Fed protects the markets is by maintaining a large book of assets. That’s why it was so careful with its messaging on [quantitative tightening]( (QT), or reducing the size of its books, after this recent FOMC meeting. Powell said this could start at the FOMC’s next meeting in May. But he did not provide any further detail. The last time the Fed halted its quantitative easing (or QE) bond-buying program was in October 2014. The size of its book was $4.5 trillion. It also allowed the bonds already on its books to mature without replacing them with new ones. That’s the “[balance sheet runoff]( we wrote about earlier this year. The size of its book slowly declined to $3.7 trillion by August 2019. From there, it quietly rose to $4.1 trillion by the start of 2020. That’s mostly because Wall Street needed the Fed’s help in the fall of 2019. Since the pandemic, the Fed’s book ballooned to its current size of nearly $9 trillion. All that fabricated money contributed to the distortion we now have between the financial markets and the real economy. And because of its unofficial third mandate, the Fed is obligated to keep the money spigots open. So it is unlikely to make any significant changes to the size of its book right now. Recommended Link [Millionaire Trader: “Tech Stocks Are Overrated, Do THIS, Instead”]( [image]( Buying Tesla, Apple, Amazon, Bitcoin, or anything else – right now – is a DEVASTATING financial mistake. One of America’s #1 trading millionaires has joined the ranks of the top 1% of wealthy… by IGNORING 99% of the entire stock market. Because within the 6,000 different stocks on the market to choose from…Hides ONE very special stock. He calls it, “The One Stock Retirement” because it’s been used for years (through ANY market condition) to catapult his wealth – closing gains like 373%, 228%, and more – time and time again. Collecting 37-YEARS of normal market gains… in just 8 days. [Today, he’s demonstrating this trade and revealing the ticker, click here to watch.]( -- What This Means for You and Your Money The Fed was too late at preventing – or even noticing – runaway inflation. In April 2021, annual inflation had shot up from 2.6% to 4.2%. Powell called it “transitory.” Now, with inflation at a 40-year high of 7.9%, the Fed is signaling further rate hikes this year. But it will take its cue from the markets, [as it’s been doing for years](. And markets like cheap money. So, much as the Fed may want to raise interest rates to curb inflation… it can’t risk a market crash to do so. That’s why the best thing to do is to ignore the noise from the mainstream media. Hold your positions. And view the choppiness in the markets right now as potential opportunities to buy your favorite stocks when they dip. Regards, [signature] Nomi Prins Editor, Inside Wall Street with Nomi Prins P.S. I stopped by Fox studios in Washington yesterday to discuss the results of the FOMC meeting. On Fox Business, I stated that I don’t believe the Fed will raise rates by 50 basis points at its next meeting. You can catch my full interview [here](. That’s because there are too many uncertainties in the world right now. These include the war in Ukraine, the possibility of a general economic slowdown due to rampant inflation, new Chinese lockdowns due to surging coronavirus cases there, global supply chain problems, and general geopolitical turmoil. --------------------------------------------------------------- Like what you’re reading? Send your thoughts to [feedback@rogueeconomics.com](mailto:feedback@rogueeconomics.com?subject=RE: What the Fed’s 25 Basis Point Rate Hike Means For You). --------------------------------------------------------------- MAILBAG Readers thank Nomi for her[thoughts yesterday on the legitimacy of cryptocurrency by the White House]( and have some ideas of their own on Bitcoin… Thanks for your insight. I am surprised how come the U.S. embraces crypto if it cannot be printed and manipulated. They cut gold from the U.S. dollar in 1971 for the same reason. Could you imagine a world where central bankers could not manipulate money? – Krishna R. Great info. Appreciate your timely, factual reporting. Look forward to your next article. – Richard L. A digital dollar that's tied to the Fed's governing system will generate tax dollars from those drifters who have been functioning outside the governing system since the emergence of Bitcoin. That fact, along with the promotion of stable currencies tied to the market, will all aid in a slow but steady rise for the dollar in general over the broader spectrum. – Andrew P. And another reader thinks about [Nomi’s insight earlier this week]( on the Fed raising interest rates… I am surprised at how you (and many others) continue to think the market will go up forever. This time is different. The economy is about as bad as it has ever been, and debt has never been higher. And as you know, no matter what the Fed does, either the market or the economy will crash. A quarter-point hike will probably invert the yield curve. I guess you must think that it will go the inflation route and go slow/minimal hikes, and the people who still have money will continue to invest (could happen, but there are fewer and fewer of them all the time). Basically, most people are either rich or poor, and the latter is growing fast. – Erik B. Could you imagine a world where central bankers do not manipulate money, as reader Krishna asked? Will you follow Nomi’s recommendation to “ignore the noise” from mainstream media and hold your positions during this time of market uncertainty? Write us at [feedback@rogueeconomics.com](mailto:feedback@rogueeconomics.com?subject=RE: What the Fed’s 25 Basis Point Rate Hike Means For You). IN CASE YOU MISSED IT… [$25 to Join the Biggest Investing Event in 400+ Years?]( What’s about to occur will be talked about for the next century or more… Investors simply haven’t seen an opportunity this big in 400+ years. (Not since the Dutch invented the world’s first stock in 1602.) 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