UN Asked Fed to Stop Raising Rates + Fed Williams says Inflation 3% next year

[cyber888]

So, I read the UN is asking the Fed and central banks to stop raising rates.

Then, this was followed by a news that Fed President John Williams stated that Inflation will have a steep decline and will be back to 3% next year.

Some commentators on Youtube said that the Fed will use the UN as an excuse to stop raising rates soon. ahhh.

https://www.msn.com/en-us/money/mar...e-hikes-on-global-recession-fears/ar-AA12yGXI

https://www.yahoo.com/finance/m/25dd58f8-354e-37fd-bec6-f0efdb9f6e80/fed’s-williams-sees-steep.html

 

[aja8888]

So, I read the UN is asking the Fed and central banks to stop raising rates.

Then, this was followed by a news that Fed President John Williams stated that Inflation will have a steep decline and will be back to 3% next year.

Some commentators on Youtube said that the Fed will use the UN as an excuse to stop raising rates soon. ahhh.

https://www.msn.com/en-us/money/mar...e-hikes-on-global-recession-fears/ar-AA12yGXI

https://www.yahoo.com/finance/m/25dd58f8-354e-37fd-bec6-f0efdb9f6e80/fed’s-williams-sees-steep.html

I saw that earlier....

It just seems that everybody wants lots of money to be printed, high government debt loads, zero or negative interest rates, high taxes, more inflation, higher wages, higher asset prices (stocks, real estate, collectibles, etc), and a wonderful life! Oh, and that will increase the "wealth effect" for those who are already wealthy. And the average Joe, well, a nice tent can be bought for $500.

 

[Jerry1]

And what about the savers. I’m fine with interest rates not going into double digits, but I hope we can get back to a situation that rewards savings. This zero cost of money can’t be sustainable. Also, it seems that a saver should be able to at least keep up with inflation, at least while inflation is in the 3% range.

 

[MichaelB]

So, I read the UN is asking the Fed and central banks to stop raising rates.

The UNCTAD, which is the trade and development agency, wrote this

The world is headed towards a global recession and prolonged stagnation unless we quickly change the current policy course of monetary and fiscal tightening in advanced economies.

As I understand this, it’s not a request to stop raising rates, it’s a warning that inducing a recession will cause more harm than good around the world and especially in low income countries and asks that policy consider this danger.

They have a valid point, as developing countries will suffer more from recessions in the OECD countries, but there is little option. In addition, UNCTAD is more a support organization and not a policy advisor, so this doesn’t really have any relevance in the policy making circles.

Then, this was followed by a news that Fed President John Williams stated that Inflation will have a steep decline and will be back to 3% next year.

This is not related to the UNCTAD report or news and it makes no sense to combine them. The text of NY Fed President Williams speech (here) affirms that more rate increases are both planned and needed to successfully combat the current inflation.

Read the speech. It’s a nuanced message of pain with optimism.

Some commentators on Youtube said that the Fed will use the UN as an excuse to stop raising rates soon. ahhh.

This is silly.

 

[Spock]

The UNCTAD, which is the trade and development agency, wrote this As I understand this, it’s not a request to stop raising rates, it’s a warning that inducing a recession will cause more harm than good around the world and especially in low income countries and asks that policy consider this danger.

They have a valid point, as developing countries will suffer more from recessions in the OECD countries, but there is little option. In addition, UNCTAD is more a support organization and not a policy advisor, so this doesn’t really have any relevance in the policy making circles.
This is not related to the UNCTAD report or news and it makes no sense to combine them. The text of NY Fed President Williams speech (here) affirms that more rate increases are both planned and needed to successfully combat the current inflation.

Read the speech. It’s a nuanced message of pain with optimism.
This is silly.

And yet a search for related articles comes up with the following headlines:

UN urges Fed to pause interest rates hikes on global recession fears.
U.N. Demands Federal Reserve, Other Central Banks Halt Interest Rate Increases
UN Warns Fed to Cool Rate Hikes
UN calls on Fed, central banks to rethink interest rate hikes
UN criticizes Fed rate hikes amid recession worries

​

other comments deleted.

 

[MichaelB]

And yet a search for related articles comes up with the following headlines:

UN urges Fed to pause interest rates hikes on global recession fears.
U.N. Demands Federal Reserve, Other Central Banks Halt Interest Rate Increases
UN Warns Fed to Cool Rate Hikes
UN calls on Fed, central banks to rethink interest rate hikes
UN criticizes Fed rate hikes amid recession worries

​

other comments deleted.

I’m not disagreeing with the headlines or any media reports, but we do soundly criticize the media here on a regular basis, so I usually look for he source and read for myself. Here’s the UNCTAD webpage with the report https://unctad.org/tdr2022

 

[cyber888]

I’m not disagreeing with the headlines or any media reports, but we do soundly criticize the media here on a regular basis, so I usually look for he source and read for myself. Here’s the UNCTAD webpage with the report https://unctad.org/tdr2022

I think the UN sees the problem with a very strong dollar, with the Fed's interest rate hikes, the US dollar has become too strong. And there are several poor nations that depend on their US dollar reserve to purchase oil and energy. As you may know, countries are only able to purchase most middle east oil with the US dollar, hence the petro-dollars.

I've seen how various country's currencies vs the dollar have lost value very fast, in the last few days, and so they have to purchase crude oil at a very high price when translated to their own currencies, causing much more global inflation, if you get my drift. So, the Fed's raising rates, will further cause global inflation and will hit the US as well. It is a cycle.

I don't think anything is silly, because the Fed can be out of touch with what's happening outside of the US. If you remember, the Fed ignored reality and said inflation was transitory. And there will be a blowback when the global recession and global inflation is worst than it should be.

 

[Sunset]

I think it's pretty hard to actually manage our own economy, and we cannot manage others as well. Especially as the goals and expectations of each are different.

Where were all these folks when the US was lowering rates, why didn't they warn us that we would have to raise the rates back to normal some day and this would end the good times

 

[luckydude]

I don't think anything is silly, because the Fed can be out of touch with what's happening outside of the US. If you remember, the Fed ignored reality and said inflation was transitory. And there will be a blowback when the global recession and global inflation is worst than it should be.

The Fed definitely missed the boat last autumn by ignoring inflation risks and insisting that inflation was "transitory" despite evidence to the contrary.

In contrast, several other OECD countries recognized early on that inflation was becoming a problem and took early steps to raise rates: New Zealand in Oct 2021, South Korea in Nov 2021, Chile in July 2021, and UK in Nov 2021. The Fed (along with EU) was late to the party and now has to play catch-up. I am no economist, but one could argue by Fed's late intervention and rapid rate hikes since March have further contributed to other countries' inflationary pressure.

 

[SecondAttempt]

The UNCTAD, which is the trade and development agency, wrote this As I understand this, it’s not a request to stop raising rates, it’s a warning that inducing a recession will cause more harm than good around the world and especially in low income countries and asks that policy consider this danger.

They have a valid point, as developing countries will suffer more from recessions in the OECD countries, but there is little option.

More hardship in developing countries = more trouble in developed countries in terms of migration. Not being political but it is the logical result. And I am not against migration, but we should all understand that many things are predictably connected and policies/enforcement can only go so far.

 

[SecondAttempt]

The US is sucking money in from around the world because of high rates and secure credit leading to a strong dollar. This will hurt US exports, which is part of the point.

 

[JDARNELL]

The US is sucking money in from around the world because of high rates and secure credit leading to a strong dollar. This will hurt US exports, which is part of the point.

Well its certainly not hurting us exporting inflation to the rest of the world. And it seems our military technology is in high demand for now. Of course these two things are something we probably don't want to be know for as exports.

The fed is doing everything they can to create demand destruction but what we don't hear a lot about is policies to increase the supply challenges. Not saying the Fed can really do much about that side but IMO these two go hand in hand.

I predict more pain around the world for the foreseeable future as more and more things begin to break. And unfortunately the developing countries and people that are on the edge are going to be the ones that suffer.

 

[frank]

the fixed income people and savers have been under siege for years and now that it is our turn to get a break, the people that benefited from the low interest rates don't like it.

 

[MichaelB]

The US is sucking money in from around the world because of high rates and secure credit leading to a strong dollar. This will hurt US exports, which is part of the point.

It’s already affected US exports, but the impact is much lower for the US because trade is a much smaller component of the US economy compares with other countries. A weaker US$ would be helpful but doesn’t look likely.

More hardship in developing countries = more trouble in developed countries in terms of migration. Not being political but it is the logical result. And I am not against migration, but we should all understand that many things are predictably connected and policies/enforcement can only go so far.

Domestic policies are already difficult to discuss and immigration is like throwing gasoline onto a bonfire. Best left for another discussion elsewhere.

 

[MichaelB]

I think the UN sees the problem with a very strong dollar, with the Fed's interest rate hikes, the US dollar has become too strong. And there are several poor nations that depend on their US dollar reserve to purchase oil and energy. As you may know, countries are only able to purchase most middle east oil with the US dollar, hence the petro-dollars.

I've seen how various country's currencies vs the dollar have lost value very fast, in the last few days, and so they have to purchase crude oil at a very high price when translated to their own currencies, causing much more global inflation, if you get my drift. So, the Fed's raising rates, will further cause global inflation and will hit the US as well. It is a cycle.

I don't think anything is silly, because the Fed can be out of touch with what's happening outside of the US. If you remember, the Fed ignored reality and said inflation was transitory. And there will be a blowback when the global recession and global inflation is worst than it should be.

My previous post was a reflection on the OP, which implied the US Fed would change its monetary policy in response to a UNCTAD report. I think that is not realistic. There are non-US organizations that do influence the US Fed. Foreign Central Banks, the IMF, the World Bank, and (especially) the BIS. These organizations develop, recommend and / or execute global policy. UNCTAD is more of a political and diplomatic organization, and I would be surprised if their paper and recommendations are even given consideration by the Fed.

NY Fed President Williams, also named in the OP, has shared a view that is, if anything, opposite to the implied conclusion. He and the Fed are clearly signaling to the world that monetary policy will continue to tighten.

From Fed speeches and papers I have read, the Fed is well informed on global economic issues, probably more so that their peers around the world. Policy designed to benefit other countries is not the Fed’s mission, nor should it be.

The US$ is strong, not because of Fed actions, but because the US economy is in much better shape than all other major economies. EU weakness is a much more serious threat to developing economies, and the same holds true for China. Increasing US interest rates will exacerbate this, but is the proper policy move.

As for YouTube comments that the Fed will use the UNCTAD report as an excuse to lower rates, I still think it’s silly.

 

[MichaelB]

To add a little more, Fed Gov Waller gave a speech September 9. A snippet follows, with my highlighting. The full text can be found here

There are three takeaways from my speech today. First, inflation is far too high, and it is too soon to say whether inflation is moving meaningfully and persistently downward. The Federal Open Market Committee (FOMC) is committed to undertake actions to bring inflation back down to our 2 percent target. This is a fight we cannot, and will not, walk away from. The second takeaway is that the fears of a recession starting in the first half of this year have faded away and the robust U.S. labor market is giving us the flexibility to be aggressive in our fight against inflation. For that reason, I support continued increases in the FOMC's policy rate and, based on what I know today, I support a significant increase at our next meeting on September 20 and 21 to get the policy rate to a setting that is clearly restricting demand. The final takeaway is that I believe forward guidance is becoming less useful at this stage of the tightening cycle. Future decisions on the size of additional rate increases and the destination for the policy rate in this cycle should be solely determined by the incoming data and their implications for economic activity, employment, and inflation.

 

[ModestNestEgg]

And what about the savers. I’m fine with interest rates not going into double digits, but I hope we can get back to a situation that rewards savings. This zero cost of money can’t be sustainable. Also, it seems that a saver should be able to at least keep up with inflation, at least while inflation is in the 3% range.

Savings rates need to be more competitive across the board, but especially from some of the largest and most well known banks which are offering a pittance on savings.

I know that the members and even lurkers here know that there are much better rates to be had, but so much of the public still thinks 0.01% on savings is the normal now.

Somehow they get need to get educated that this is not okay for these banks (primarily the huge banks that pop up on every corner across the US) to be doing this and taking advantage of their customers' ignorance and inertia. It wasn't okay three or five years ago, and it is even much more inexcusable now. This isn't counting the rip off fees that they charge. Some serious calling out is in order.

 

[jldavid47]

Then, this was followed by a news that Fed President John Williams stated that Inflation will have a steep decline and will be back to 3% next year.

John Williams has no better idea of where inflation will be a year from now than you or I. He and the rest of the clowns at the Fed were telling us just a year ago that inflation was "transitory" while people who actually lived in the real world knew better. How did that work out?