{"id":462362,"date":"2022-06-14T02:05:00","date_gmt":"2022-06-13T23:05:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/your-401k-is-in-the-feds-hands-this-week\/"},"modified":"2022-06-14T02:05:00","modified_gmt":"2022-06-13T23:05:00","slug":"your-401k-is-in-the-feds-hands-this-week","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/your-401k-is-in-the-feds-hands-this-week\/","title":{"rendered":"#Your 401(k) is in the Fed&#8217;s hands this week"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3dfca126c3e\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3dfca126c3e\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/your-401k-is-in-the-feds-hands-this-week\/#%E2%80%9CYour_401k_is_in_the_Feds_hands_this_week%E2%80%9D\" >&#8220;Your 401(k) is in the Fed&#8217;s hands this week&#8221;<\/a><\/li><\/ul><\/nav><\/div>\n<h1><span class=\"ez-toc-section\" id=\"%E2%80%9CYour_401k_is_in_the_Feds_hands_this_week%E2%80%9D\"><\/span>&#8220;Your 401(k) is in the Fed&#8217;s hands this week&#8221;<span class=\"ez-toc-section-end\"><\/span><\/h1>\n<div>\n<aside class=\"single__inline-module alignleft\">\n<\/aside>\n<p>At this week\u2019s policy meeting, the Federal Reserve will have to choose its poison. If it fails to accelerate the pace of interest-rate hikes, it risks losing control over runaway inflation. Yet if it surprises us with a faster pace of interest-rate increases, it risks further tanking the stock market, thereby creating the conditions for an early hard economic landing.<\/p>\n<p>The Fed is largely to blame for its terrible policy dilemma. Last year, when the country\u2019s largest peacetime budget stimulus on record risked overheating the economy, the Fed kept interest rates at their zero lower bound and allowed the money supply to balloon. It did so in the mistaken belief that the pickup in inflation was but a transitory phenomenon caused by COVID-induced supply-chain disruptions.<\/p>\n<p>At the same time, the Fed kept injecting $120 billion a month in liquidity into the markets through its bond-buying activities \u2014 despite the fact that the stock market was booming and the housing market was on fire.<\/p>\n<p>The net result of the Fed\u2019s monetary-policy largesse has been both sky-high inflation and asset-price and credit-market\u00a0bubbles. Even before Russia\u2019s Ukrainian invasion sent oil and food prices through the roof, inflation had spiked to levels last seen in the early 1980s. Similarly, by the end of last year, equity valuations reached nosebleed levels recorded only once before in the last 100 years, while housing prices exceeded their 2006 peak even in inflation-adjusted terms.<\/p>\n<p>With inflation having become the nation\u2019s No. 1 economic problem and running at some four times the Fed\u2019s 2% inflation target, the bank had little alternative but to make an abrupt tactical U-turn. At is last policy meeting, in April, it indicated that it would start raising interest rates in 50 basis-point steps, rather than the more normal 25 points. It also announced that starting in the fall, it would be withdrawing as much as $95 billion a month in liquidity from the market by not rolling over its maturing bond holdings.<\/p>\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"682\" src=\"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/06\/jerome-powell.jpg?w=1024\" alt=\"Federal Reserve Chairman Jerome Powell's track record suggests the Fed may stick with the 50-point-increase path.\" class=\"wp-image-22642946\" srcset=\"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/06\/jerome-powell.jpg?quality=75&amp;strip=all&amp;w=1535 1536w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/06\/jerome-powell.jpg?quality=75&amp;strip=all 1024w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/06\/jerome-powell.jpg?quality=75&amp;strip=all&amp;w=512 512w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\"\/><figcaption>Federal Reserve Chairman Jerome Powell\u2019s track record suggests the Fed may stick with the 50-point-increase path.<\/figcaption><figcaption><span class=\"credit\">AP Photo\/Evan Vucci<\/span><\/figcaption><\/figure>\n<p>It would be an understatement to say that the stock market has not taken kindly to higher interest rates and the notion that the Fed will no longer have its back by flooding the market with liquidity. Since the start of the year, the S&amp;P 500 has lost more than 20% in value while the tech-heavy NASDAQ has lost more than 30%. This represents the evaporation of around $9 trillion, or more than 40% of GDP, in household wealth.<\/p>\n<p>When the Fed meets Tuesday and Wednesday, it will be not only against the background of a tanking stock market. It will also have to gr<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>le with plummeting consumer confidence because of high inflation, a crumbling housing market and the risk that an already uncomfortably high inflation rate could be pushed higher by rising oil prices and more Chinese supply-side disruptions as a result of that country\u2019s zero-tolerance COVID policy.<\/p>\n<p>All this leaves the Fed with the most unenviable of policy choices. It can now begin raising interest rates in 75 basis-point steps, even at the risk of further unhinging the stock market and bringing on a recession by year\u2019s end. Alternatively, it can stick to its current path of 50 basis-point increases even though that risks allowing inflation expectations to become entrenched and setting us up for an even harder economic landing next year.<\/p>\n<p>On the basis of the Powell Fed\u2019s record of policy timidity, my money is on the Fed sticking to its current 50-point-increase\u00a0path. However, I am hoping that it surprises us by doing the right thing and tackling the inflation beast by the horns now\u00a0with a 75 basis-point hike.<\/p>\n<p><em>Desmond\u00a0Lachman\u00a0is a senior fellow at the American Enterprise Institute. He was formerly a deputy director in the International Monetary Fund\u2019s Policy Development and Review Department and the chief emerging-market economic strategist at Salomon Smith Barney.<\/em>\n                        <\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/news\/\" target=\"_blank\" rel=\"noopener\">News category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/nypost.com\/2022\/06\/13\/your-401k-is-in-the-feds-hands-this-week\/\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;Your 401(k) is in the Fed&#8217;s hands this week&#8221; At this week\u2019s policy meeting, the Federal Reserve will have to choose its poison. If it fails to accelerate the pace of interest-rate hikes, it risks losing control over runaway inflation. Yet if it surprises us with a faster pace of interest-rate increases, it risks further&#8230;<\/p>\n","protected":false},"author":1,"featured_media":462363,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/06\/federal-reserve.jpg?quality=75&strip=all&w=1024","fifu_image_alt":"","footnotes":""},"categories":[70897],"tags":[74650,130276,70550,70551,78738,72388],"class_list":["post-462362","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-401k","tag-6-13-22","tag-federal-reserve","tag-inflation","tag-jerome-powell","tag-stock-market"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/462362","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=462362"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/462362\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/462363"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=462362"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=462362"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=462362"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}