Tag: Interest Rates

There Is a Tax That Could Help With Inflation

And the deepest pain falls, as it so often does, on the poor and the jobless. High interest rates can shift the decisions richer people make about spending. If it’s a bad time to buy a house, even a multimillionaire might wait a few years. But higher interest rates won’t change how much child care […]

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Sleepy Corner of U.K.’s Pension Industry Forced the Bank of England’s Hand

Plans by Britain’s new prime minister, Liz Truss, to cut taxes and freeze energy bills landed like a bomb in a niche corner of financial markets, hitting government bond prices so hard that the Bank of England was compelled to intervene, and highlighting how obscure derivatives can still shake up the global financial system more […]

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A Strong Dollar Is Hurting Other Countries. Should the Fed Care?

“There is a danger that central banks jointly create an unnecessarily sharp global recession,” Maurice Obstfeld, an economist at the University of California, Berkeley, and a former chief economist of the International Monetary Fund, warned this month in a draft paper for the Brookings Papers on Economic Activity. That downturn, he and his co-author, Haonan […]

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How the Remote Work Craze Made Housing Affordability Worse

When you’re telling stories about the economy, housing almost always looms large. It plays a huge role in the economy’s ups and downs: A burst housing bubble was the prime mover in the Great Recession of 2007-9, and the Federal Reserve’s leverage over the economy comes largely from the influence of interest rates on the […]

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U.K. Borrowers React to Soaring Interest Rates in Mortgage Market

LOUGHTON, England — After nearly two decades of renting in one of the world’s most expensive cities, the Szostek family began the week almost certain that they would finally own a home. Transplants to London who fell in love as housemates, Laetitia Anne, an operations manager from France and her husband, Maciej Szostek, a chef […]

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Bonds May Be Having Their Worst Year Yet

It’s happened before. The last time the Federal Reserve had to cope with inflation this high was in the early years of Paul A. Volcker’s tenure as Fed chairman, from August 1979 through 1982. He responded by sharply increasing interest rates and throwing the economy into two recessions. Our Coverage of the Investment World The […]

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Is the Fed Braking Too Hard?

If you’ve ever found yourself driving in stop-and-go traffic, you know that there’s a strong temptation to overreact to changes in the flow. When the cars in front of you finally start moving, you floor the gas pedal, then you slam on the brakes when traffic slows down again, and if you’re a normal human […]

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Mortgage Rates Hit 7%, Housing Prices Expected to Fall

Few analysts, however, expect the market to crash as it did after the 2008 subprime mortgage crisis, in part because of stricter underwriting practices and a massive swell of home-price appreciation over the last two years. “If you bought in 2020, you still have a lot of equity,” said Nicole Bachaud, a senior economist with […]

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Stocks Drop as Focus Shifts Back to a Potential Recession

Wall Street’s downdraft continued on Thursday, as investors’ worries about inflation, sky-high interest rates and a potential recession continued to grip financial markets. The S&P 500 fell 2 percent in early trading, on track for its sharpest drop so far in an ugly stretch for stock investors. Bonds, oil prices and shares in Europe were […]

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FOMO Helped Drive Up Housing Prices in the Pandemic. What Can We Expect Next?

This period was also one of other stresses. The spectacle of the invasion of the Capitol on Jan. 6, 2021, the intensified quarrel between left and right, and the Russian invasion of Ukraine on Feb. 24, 2022, with all of its brutality, plus the rash of forest fires and talk of nuclear war, no doubt […]

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Truss Takes a Bold Economic Gamble. Will It Sink Her Government?

LONDON — Prime Minister Liz Truss of Britain campaigned as a tax cutter and champion of supply-side economics, and she won the race to replace her scandal-scarred predecessor, Boris Johnson. Now she has delivered that free-market agenda, and it may sink her government. Four days after Ms. Truss’s tax cuts and deregulatory plans stunned financial […]

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Markets Calm Down After Recession Fears Drive Steep Drops

Asian markets were mostly flat on Tuesday after days of worrisome economic news and tightening interest rates had driven down shares around the world. The Nikkei in Japan climbed 0.83 percent, while South Korea’s Kospi composite index was down 0.39 percent. While the Hang Seng Index in Hong Kong was down 0.8 percent. Oil futures […]

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Strong Dollar Is Good for the US but Bad for the World

The Federal Reserve’s determination to crush inflation at home by raising interest rates is inflicting profound pain in other countries — pushing up prices, ballooning the size of debt payments and increasing the risk of a deep recession. Those interest rate increases are pumping up the value of the dollar — the go-to currency for […]

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Stock Markets Tumble as Recession Fears Return

Stocks nose-dived, government bond prices plummeted, the pound dipped against the dollar, oil prices slumped and cryptocurrencies wobbled on Friday as investors, already worried about rising interest rates and stubbornly high inflation, started quaking at the growing likelihood of a recession. Their worries grew throughout the week as central banks around the world, from Sweden […]

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Fed Chairs Are People, Too

A psychologist or a novelist might be as useful as an economist in explaining what the Federal Reserve is up to these days. The change in the Fed’s monetary policy this year has been so extreme that it’s hard to explain using economists’ tools alone. Until early this year the Fed kept short-term interest rates […]

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The Fed’s Outlook Is an ‘Unrealistic Fantasy’ to Some Investors

At the Federal Reserve’s meeting on Wednesday, alongside warnings of pain to come, policymakers sketched out a hopeful scenario in which they were able to reduce inflation gently, while the economy, albeit weakening, remained resilient. Not everyone in the market agrees. In particular, traders and analysts who follow the direction of interest rates closely said […]

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Central Banks Accept Pain Now, Fearing Worse Later

A day after the Federal Reserve lifted interest rates sharply and signaled more to come, central banks across Asia and Europe followed suit on Thursday, waging their own campaigns to crush an outbreak of inflation that is bedeviling consumers and worrying policymakers around the globe. Central bankers typically move slowly. That’s because their policy tools […]

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Bad News From the Fed? We’ve Been Here Before.

The Federal Reserve’s decision to raise interest rates again is hardly a positive development for anyone with a job, a business or an investment in the stock or bond market. But it isn’t a great shock, either. This is all about curbing inflation, which is running at 8.3 percent annually, near its highest rate in […]

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The Fed Intensifies Its Battle Against Inflation

Federal Reserve officials, struggling to contain the most rapid inflation in 40 years, delivered a third big rate increase on Wednesday and projected a more aggressive path ahead for monetary policy, one that would lift interest rates higher and keep them elevated longer. The Fed raised its policy interest rate by three-quarters of a percentage […]

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What Comes Next in the Fed’s Fight Against Inflation?

The Federal Reserve is expected to deliver a third straight supersize interest rate increase this week as it wages its most aggressive fight against inflation since the 1980s — and it could signal even more to come. Central bankers are widely expected to raise interest rates three-quarters of a percentage point at their meeting on […]

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Stocks Slide in One of Wall Street’s Worst Weeks This Year

Stocks fell on Friday, ending one of the worst weeks of the year for Wall Street. But a parade of prominent investors and corporate executives made it clear that they believed the worst was yet to come for the economy and financial markets. After hitting a low in June, the S&P 500 had rallied more […]

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Mortgage Rates Jump Above 6%, Putting Pressure on Housing Market

Mortgage rates climbed above 6 percent this week, their highest point since late 2008 and more than double their level a year ago, further squeezing the budgets of would-be home buyers. The average rate on a 30-year fixed-rate mortgage was 6.02 percent as of Thursday, Freddie Mac reported, up from 5.89 percent the week before. […]

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New Inflation Developments Are Rattling Markets and Economists. Here’s Why.

When inflation began to accelerate in 2021, price pressures were clearly tied to the pandemic: Companies couldn’t produce cars, couches and computer games fast enough to keep up with demand from homebound consumers amid supply chain disruptions. This year, Russia’s war in Ukraine sent fuel and food prices rocketing, exacerbating price pressures. But now, as […]

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Inflation Came in Faster Than Expected in August Even as Gas Prices Fell

As goods inflation lingers, services inflation has also been coming in strong — especially in housing costs. Shelter inflation picked up sharply in August, with a rent measure climbing at its fastest pace since the 1980s. That matters because housing-related prices make up about a third of overall inflation and are expected to remain elevated […]

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Markets Shudder on Higher-Than-Expected Inflation Numbers

Stocks plummeted and U.S. government bond yields rocketed higher after fresh inflation data undermined investors’ bets over the slowing pace of inflation in August. The S&P 500 slumped more than 2 percent as trading opened on Tuesday. Stocks had nudged higher in recent trading sessions, rising 1.1 percent on Monday and nearly 5 percent over […]

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Fed Chair Powell Signals Interest Rates to Remain High to Fight Inflation

Jerome H. Powell, the Federal Reserve chair, signaled on Thursday that the central bank will continue raising interest rates to convince the American public that it is serious about bringing soaring price growth back to normal levels, further cementing market expectations of another aggressive rate increase this month. “The longer inflation remains well above target, […]

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Shock Waves Hit the Global Economy, Posing Grave Risk to Europe

Russia’s invasion of Ukraine and the continuing effects of the pandemic have hobbled countries around the globe, but the relentless series of crises has hit Europe the hardest, causing the steepest jump in energy prices, some of the highest inflation rates and the biggest risk of recession. The fallout from the war is menacing the […]

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U.S. Job Growth Slowed in August

“Unfortunately, as the demand and sales volumes pulled back, we had to account for that,” said Seth Barnes, who owns the company with his wife, Samantha. “We’re a little more comfortable saying, let’s be conservative, let’s hope for a good holiday, but let’s not overextend ourselves, whereas the past two years we were more like, […]

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The Fed Chair’s Challenge: Be Clear, but Not Too Certain

The Federal Reserve chair, Jerome Powell, has declared war on inflation, and on Friday he was specific about his battlefield tactics. “July’s increase in the target range was the second 75-basis-point increase in as many meetings, and I said then that another unusually large increase could be appropriate at our next meeting,” Powell said at […]

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Jerome Powell Warns That War on Inflation May Be Painful

JACKSON, Wyo. — Jerome H. Powell, the chair of the Federal Reserve, warned that the central bank’s campaign to beat back the fastest inflation in decades will come at a cost to workers and overall growth. But he emphasized that the Fed must continue raising interest rates — and keep them elevated for a while […]

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