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  • Frank Tian

๐Ÿ‡บ๐Ÿ‡ธ US Interest Rate

The 3-year Pandemic Journey - ๐Ÿ‡บ๐Ÿ‡ธ US Interest Rate

Yesterday the Fed continued the rate hike for the 9th time - with 25 bps.

Here is a recap of the rate change journey.

๐ŸŸข Mar 2020

The pandemic suddenly halted the economy. The Fed slashed the rate by 150 bps in two emergency cuts.

๐Ÿ”ต Apr โ€˜20 - Feb โ€˜22

As the economy gradually reopened, the Fed kept the interest rate near zero.

This is a reflection of the long road to economic stability - as the virus variants hit in waves and the labor market slowly recovered.

๐Ÿ“Sep โ€˜20: Fed adopted Average Inflation Targeting, which would allow inflation above 2% for some time to balance previous shortfalls.

๐ŸŸก Mar 2022

As the unemployment rate reached 3.8% low and inflation ran to 8.0% high, the Fed kicked off the interest rate hike cycle with 0.25% increase.

From Mar โ€˜22 to Feb โ€˜23, the Fed served 8 hikes in a row with a cumulative 450 bps increase - the fastest in history.

๐ŸŸฃ Mar 2023

With the fall of "Si" banks (Silvergate, Silicon Valley, and Signature), regulators quickly stepped in with deposit guarantees and special liquidity support. It is estimated the effect of the banking crisis is equivalent to a 100+ bps hike.

On Mar 22nd, the Fed raised the 9th time with 0.25%, signaling the increase cycle is near the end.

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The Fed has handed out 10 rate hikes, with a possible 11th next month. What are the effects of the fastest rate hikes, so far? [US Macro parameter: Mar 2022 vs. May 2023/latest] ๐Ÿ“Inflation: 8.5% vs.


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