Although the market predicted the increase and its price, the market crashed and fell after hearing the speech of the head of the Fed, Powell, who was once again rigid and claimed that they will continue to fight inflation at all costs and that the chance of a “soft landing” for the economy has decreased.
In addition, Powell said that they will keep interest rates high for a long time in order to fight inflation and avoid repeating the Fed’s mistakes in the 1970s when they lowered interest rates too quickly and paid dearly for it.
Those who follow the enormous debt of the United States know that in a high interest rate environment, the Fed pays so much interest on its debt that the cost of paying the interest is almost the same as the defense budget of the entire United States military (!!!).
Therefore, in our opinion, it is unlikely that the Fed will really keep interest rates high for such a long time and it will be forced to change its position soon.
