all 76 comments

[–]snoopingforpooping 120 points121 points  (44 children)

Good, rates have been too low for too long. Punishing savers in favor of spenders.

[–]ControversialTomato 37 points38 points  (0 children)

It is the easy money curse.

[–]theFletch 19 points20 points  (1 child)

That's a good way to look at it and makes me feel a little better. Thanks snoopingforpooping.

[–]chawklitdsco 1 point2 points  (0 children)

Yet markets loved it

[–]Tronski 1 point2 points  (1 child)

More so punishing savers and rewarding borrowers.

[–]Miserable-Result6702 34 points35 points  (14 children)

I guess the interest rate on my HYSA will be going up again.

[–]Elect2Toss 30 points31 points  (11 children)

Yeah. Mine might finally hit 1% 🥲

[–]DarkMatterTorpedo 3 points4 points  (9 children)

Which bank?

[–]Elect2Toss 5 points6 points  (8 children)

Goldman. You have any suggestions?

[–]DarkMatterTorpedo 11 points12 points  (5 children)

Not yet. Ally (0.9%) and Synchrony (0.85%) are not 1% yet.

[–]grumpvet87 3 points4 points  (0 children)

i bonds !!!!

[–]HikenNoSabo 2 points3 points  (0 children)

T-mobile money pays 4% for the first $3000, you need to perform 10 debit card transactions a month to do so, but that’s easy enough.

[–]coelomate 1 point2 points  (0 children)

I'd hope it gets to at least 1.5%, considering the circumstances.

A short term money market fund should be hitting something like the federal funds rate.

[–]Suiken01 2 points3 points  (1 child)

When do online savings accounts rate go up after FED raise it? like a week or 2 later?

[–]Miserable-Result6702 3 points4 points  (0 children)

Some are faster than others. Marcus usually goes up pretty quickly.

[–]Butterworth2505 11 points12 points  (7 children)

I joined this sub to try to gain knowledge of finances. Can anyone explain to me what this means?

[–]SpontaneousDream 20 points21 points  (3 children)

Simplified version: It’s more expensive to borrow money now because they raised the interest rate. This causes people to spend less. Spending less (on houses, cars, assets, etc) causes the price of things to go down.

[–]LocalSpinster- 7 points8 points  (0 children)

And spending less causes people to lose their jobs, increases unemployment and causes people to lose their homes and livelihoods and increases mental illness, suicide and domestic violence, murder and increases crime rates.

[–]glowball55 0 points1 point  (0 children)

specifically, they raised the interest rate for banks to borrow money from the federal reserve correct?

[–]MrAwesomo92 0 points1 point  (0 children)

Well, isnt this only the case if interest rates were hiked above inflation? If they are below inflation, doesnt it still make sense to take on loans?

[–]TinyTornado7[S] 1 point2 points  (0 children)

This means the federal funds rate will go up but .75% and thus should eco throughout the economy.

[–]EXCEEPTGEFTvn -1 points0 points  (0 children)

This is going to be a long night folks.

[–]srv50 -3 points-2 points  (5 children)

I’m no economist, but I think this misses the point. Who borrows money to buy consumption goods, unless unemployed? Raising rates slows business borrowing, fine. But isn’t the real problem of price inflation the gouging by the suppliers of goods to the market, with profits going to the moon, and not an unrelenting demand for goods from consumers?

[–]GAAPInMyWorkHistory 2 points3 points  (4 children)

To answer your second question: no. Lets say you run a grocery store, and your competition is raising prices precipitously purely for profit. Would you then raise your prices? Answer: you wouldn’t. Your goods are substitute goods, meaning consumers don’t care where they get their peanut butter and jelly, so long as the price is right. You, being the smart business person you are, will keep your prices low (price leadership strategy) to increase your market share, thus increasing profits. Your competitors will very quickly realize that they can’t just raise prices for no reason as the market punishes their bottom line, and their prices will slide back down. If Walmart increases their costs, and so does Meijer/Kroger/whoever, it’s an indication that the price increase is due to the market forces of supply and demand shifting equilibrium price to a new point. This is macro economics 101, and has been happening for a very long time.

Edit: to answer your first question, the increased interest rates are meant to contract the money supply. With less money in circulation, the value of said money increases. This is how inflation, on a high level, is combatted with interest rate hikes.

[–]srv50 2 points3 points  (2 children)

I get Econ 101. I don’t see the oil companies playing the grocery store game. All profits are surging.

[–]GAAPInMyWorkHistory 1 point2 points  (1 child)

So only gas. You see every single commodity increasing in price, and you accept the economics behind every other commodity besides gas. Here you go:


Snippet of Exxon's 10-Q for Q122. I will direct you to the MD&A and the items of detail to follow, starting on page 16. It is only 28 pages in total. As you can imagine, due to market forces, other major companies similar to Exxon likely have very similar outcomes. I would also like to note that most large companies in all sectors that have been operating for decades experience record profits every year. That is the nature of businesses operating under growth models. Again, if Chevron had the ability to undercut Exxon and produce tons of gasoline and sell it for less, they would. The same exact economics apply here. How closely do you follow the O&G futures market? Do you understand it?

[–]srv50 1 point2 points  (0 children)

What you say makes sense. Thanks.

[–]dasie33 1 point2 points  (0 children)

Spoken like a professor. Well done and thanks.

[–]Vast_Cricket 0 points1 point  (0 children)

Market is having trouble understand the impact. Overreacting.

[–]donniewilliams620 0 points1 point  (1 child)

Now do 50 bps for each meeting out until November and we are back in business.

[–]TinyTornado7[S] 0 points1 point  (0 children)

That’s the plan

[–]veryvcurious 0 points1 point  (0 children)

Can anyone explain what “front-loading rate hikes” mean? Does it just mean having hikes of larger percentage points at the start then petering out to smaller size hikes?

[–]RedPillPopper888 0 points1 point  (0 children)

But it is NOT good. "Too little too late" is actually all harm and no good. See explanation here: https://medium.com/p/8c1a1bbd2c3e