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🦧 what the dot

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🦧 what the dot

Ape of Omaha
Sep 26, 2022
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🦧 what the dot

www.wiseape.fyi

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📊 what the dots mean

 

last week, the fed raised target rates by another 75 basis points (or .75%)

  • the dot plot above was released last wednesday after the latest fomc (federal open market committee) meeting

  • each dot represents each fed official's projection for the fed funds rate

 

what is the fed funds rate?

  • there are many types of interest rates (i.e. mortgage, credit card, etc.)

  • the fed funds rate is the key short-term interest rate that gets targeted after each fomc

    • it's the rate at which banks and other depository institutions lend money to each other, usually on an overnight basis (yes, that is a whole business)

  • now, none of us borrows money at the fed funds rate (and in fact at rates higher, since we’re nowhere close to being as “riskless” as a bank), but in essence, the fed funds rate is the benchmark

    • if that number goes up, all other interest rates generally go up, and vice versa (to put it very simple)

 

so what’s up with the latest dot plot?

  • basically, there's still more room for rate hikes

  • fed official anticipate rates to rise to as high as 4.6% in 2023

    • 6 out of 19 dots are even indicating the 4.75-5.00% range

 

also, officials indicated inflation may not come down to the traditional 2% target until 2025

 

happy monday!

💡 something im thinking about

antarctica now has high speed internet (click image)

that's all, folks 🐒

 

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as always, i’m no financial advisor! (i’m no substitute for professional financial services)
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🦧 what the dot

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