Fed Keeps Rates Steady (Patreon)

The Federal Reserve kept interest rates steady at a 22-year high but indicated the possibility of future rate hikes to control inflation. Recent economic activity is described as robust, with concerns about the impact of rising long-term interest rates.

The 10-year Treasury yield has increased by nearly 1 percentage point since the last rate hike, with the benchmark federal-funds rate set between 5.25% and 5.5%. This is the longest period without a rate increase since the Fed started raising rates in March 2022.

Three key forces have influenced the economic outlook since the last meeting: a surge in economic activity and employment, a cooling in inflation rates, and tightening financial conditions due to a rapid increase in longer-dated Treasury yields. This has implications for mortgages, auto loans, and business debts.

Officials are navigating the challenges of not raising rates excessively to prevent a severe downturn while also ensuring inflation doesn't surge beyond their 2% target. The debate continues among former Fed officials and economists about the best approach, with some suggesting additional rate hikes and others advocating a more cautious stance.

Markets have not moved but SOL is going parabolic.