FOMC September Focus and Global Economic Recession Risk

Last week's FOMC meeting set a base rate hike of +75bps from September. This is also the third consecutive time the Fed has raised rates at this unusually high level in 2022. Although the market had price-in this increase beforehand, the subsequent press conference reflected a rather hawkish stance from the Fed beyond market expectations.

Accordingly, the main content of the press conference was the Fed acknowledging that interest rate tools have not yet had much impact on inflation. The Fed will also continue these tools in monetary policy for longer to bring inflation back to 2% even though the housing market and economy currently show signs of deterioration. Viet Hustler summarized the press conference content in the market article right after FOMC.

This week's macroeconomic focus will analyze in more detail the Fed's interest rate policy and its impact on the housing market and labor. Accordingly, Viet Hustler wants to emphasize the risk of a global “Great Recession” that could occur when central banks simultaneously raise interest rates and protect their domestic currencies.

Fed's interest rate policy and the “butterfly” effect on the global economy

Fed's interest rate policy going forward: Higher for longer