Speaking to CNBC, Barkin said, “So we’re happy to see inflation start to move down [..] I’d like to see a period of sustained inflation under control, and until we do that I think we’re just going to have to continue to move rates into restrictive territory.”

According to the Bureau of Labor Statistics, headline consumer prices were flat in July while producer prices were down 0.5%.

However, this figure is just one month’s data, with CPI still up 8.5% on a year-over-year basis and the producer price index climbing 9.8%. Each of these figures is still notably over the Federal Reserve’s target of 2%, meaning the central bank must continue to push forward in order to meet this goal.

“You’d like to see inflation running at our target, which is 2% at the PCE, and I’d like to see it running at our target for a period of time,” Barkin commented.

The news comes not long after the Federal Reserve upped interest rates by three-quarters of a percentage point to a range of 2.25%-2.50% in a bid to curb growth and ease price pressures.

Despite the report, Federal Reserve Chair Jerome Powell thus far maintains the view that an economy that is adding hundreds of thousands of jobs per month is not experiencing a recession. Over the past months, Powell has vowed to take action against record-high inflation. 

"We do want to see demand running below potential for a sustained period to create slack and give inflation a chance to come down," Powell commented on Wednesday. 

"It's also worth noting that these rate hikes have been large and they've come quickly, and it’s likely that their full effect has not been felt by the economy. So there’s probably some additional tightening - significant additional tightening in the pipeline."

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Compared to one year ago, the CPI hit 9.1% in June, jumping from the 8.6% year-on-year rise seen the month before. The increase maintains the highest inflation seen in four decades for the US economy.

Wall Street analysts had predicted a month-on-month increase of 1.1% and an annual increase of 8.8%.

June’s rise was heavily influenced by higher fuel and food costs. The price of petrol increased 11.2% from May while energy prices rose 60% over the past year. Food prices were up 1% from May and 10.4% over the previous 12 months. 

Last month, Federal Reserve Chair Jerome Powell vowed that policymakers would not allow inflation to overcome the US economy in the long term:“The risk is that because of the multiplicity of shocks you start to transition to a higher inflation regime. Our job is literally to prevent that from happening, and we will prevent that from happening,” Powell said.

“We will not allow a transition from a low-inflation environment into a high-inflation environment.”

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In June, Federal Reserve officials highlighted the need to tackle inflation, even if it came at the cost of slowing the economy amid the looming threat of recession. They said that the US central bank’s July meeting would likely see another 50 or 75 basis point move on top of a 75 basis point increase that was approved in June. 

“In discussing potential policy actions at upcoming meetings, participants continued to anticipate that ongoing increases in the target range for the federal funds rate would be appropriate to achieve the Committee's objectives,” the minutes read.

“In particular, participants judged that an increase of 50 or 75 basis points would likely be appropriate at the next meeting. Participants concurred that the economic outlook warranted moving to a restrictive stance of policy, and they recognised the possibility that an even more restrictive stance could be appropriate if elevated inflation pressures were to persist.”

[ymal]

In June, the US central bank upped its benchmark interest rate by three-quarters of a percentage point, the largest hike since 1994. This increase followed a quarter-point increase in March and a half-point increase in May. 

In the coming months, further rate hikes are expected. On average, Fed policymakers said they expect interest rates to rise to approximately 3.4% by the end of this year, up from the 1.9% increase projected back in March.

Speaking to CNBC, Scharf said that while the consumer and small businesses have remained strong, the impact of rising rates has not been properly taken into consideration with regard to the broader economy.

“We know rates are going up, it couldn’t be clearer,” Scharf told CNBC on Wednesday. “We know that consumers and businesses, while strong today, are going to see deterioration, and we’re going to act surprised when it happens.”

“That doesn’t mean the world is coming to an end,” Scharf continued, though added that “we should do our best to recognise that and focus on what the solutions are.”

[ymal]

There was also an increase for similar keywords, such as “Bitcoin is dead”. 

This search trend reflects increasing anxiety for the crypto markets after weeks of relentless selloffs.

There are several theories behind why Bitcoin and other cryptocurrencies are crashing. Its downward spiral may have been caused by a shift in Federal Reserve policy, which placed downward pressure on risk assets.

However, many experts are putting the crash down to the wider global climate. Recessions are on the horizon, inflation is soaring, interest rates are up, and many people are battling with rising living costs. In turn, these factors cause demand for crypto to slide.

Recently, Microsoft co-founder Bill Gates described NFTs and cryptocurrency as “100% based on greater tool theory”, implying that overvalued assets will go up in price when there are enough willing investors. 

[ymal]

The US central bank increased its policy rate by 75 basis points on Wednesday to a range of 1.5% to 1.75% as officials increased their fight against stubborn inflation.

Wells Fargo & Co now expects a “mild recession” for the end of 2022 and into early 2023. 

“The Federal Reserve is going to hike interest rates until policymakers break inflation, but the risk is that they also break the economy,” Ryan Sweet, Moody’s Analytics head of monetary policy research, said. “Growth is slowing and the effect of the tightening in financial market conditions and removal of monetary policy have yet to hit the economy.”

A recession is generally defined as a downturn in overall economic activity that is broad and lasts for more than a few months. The United States has only just emerged from the economic slump that was triggered by the Covid-19 pandemic. 

[ymal]

The 2-year rate increased by more than 10 basis points to 3.1535%, hitting its highest level since 2007. The benchmark 10-year Treasury yield was also up, trading at around 3.1762%.

This week, a highly anticipated Federal Reserve meeting will be held, with the US central bank likely to announce at least a half-point rate hike on Wednesday. The Federal Reserve has already upped rates on two occasions this year, including a 0.5 percentage point increase in May in a bid to stave off surging inflation.

Last week, it was reported that the US consumer price index was up 8.6% in May on a year-over-year basis. This is its fastest jump since 1981, according to the Bureau of Labor Statistics. 

[ymal]

On Wednesday, the Federal Reserve upped its benchmark interest rate by half a percentage point. Additional interest rate hikes, as well as tightening of monetary policy, have exacerbated fears that the US economy could enter into a recession.

“The market still needs to digest the impact of tighter monetary policy on all risk assets and crypto might take a hit as correlations [with US stocks increase]”, said Josh Lim, head of derivatives of New York-based brokerage Genesis Global Trading.

On Friday, Bitcoin was down less than 1% at $35,900.25, according to Coin Metrics. Meanwhile, Ether was down 1.1%. 

The crypto sale was sparked by a difficult Thursday on Wall Street where the Dow Jones Industrial Average lost over 1000 points. Nasdaq also fell 5%. The losses of each marked the worst single-day decline since 2020.  

Powell’s statements meet market expectations that the Federal Reserve will move away from its usual 25 basis point hikes and instead work quickly to tame inflation that is at its highest rate in over four decades.

In its March meeting, the Federal Reserve approved a 25 basis point move, though, in recent days, officials have stated that faster action is necessary, with consumer inflation running at an annual pace of 8.5%.

“Our goal is to use our tools to get demand and supply back in synch, so that inflation moves down and does so without a slowdown that amounts to a recession,” Powell commented. “I don’t think you’ll hear anyone at the Fed say that that’s going to be straightforward or easy. It’s going to be very challenging. We’re going to do our best to accomplish that.”

“It’s absolutely essential to restore price stability [...] Economies don’t work without price stability.”

Powell’s vow comes less than a week after the Federal Reserve upped interest rates for the first time since 2018 in a bid to tackle inflation that is at its highest level in four decades. 

On Monday, Powell reiterated the position the Federal Open Market Committee made in its post-meeting statement, stating that interest rate hikes would continue until inflation is once again under control. Powell said that, if necessary, increases could be even higher than the quarter-percentage point move approved in the meeting. 

“We will take the necessary steps to ensure a return to price stability,” Powell said. “In particular, if we conclude that it is appropriate to move more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or meetings, we will do so. And if we determine that we need to tighten beyond common measures of neutral and into a more restrictive stance, we will do that as well.”