The financial world was waiting with bated breath for the Federal Reserve to make the announcement wherein they revealed they are making a 50 basis point hike. What exactly does that mean? Joining us in this discussion is Devlyn Steele, education director for Augusta Precious Metals.
Q&A:
1. There seems to be a lot of “noise” surrounding the news that the Federal Reserve has raised interest rates by 50 basis points. Why is this such a big deal?
If you look at its history, the Federal Reserve normally raises interest rates in increments of 25 basis points. The Fed’s 50-basis-point hike on Wednesday is the first one of that magnitude since 2000.
2. If 25-basis-point increases basically are the norm, why did the Fed raise rates 50 basis points this time?
In articles and alerts lately, the central bank is indicating it’s very concerned about inflation, which at 8.5% is now at the highest level in more than 40 years. The Fed’s recent comments clearly show it believes a larger-than-normal rate increase is in order to combat soaring prices.
3. So let me ask this: If interest-rate hikes are designed to control inflation by slowing down economic activity, won’t big rate increases raise the chances of recession?
It certainly is possible based on history, and that’s a big part of why there’s a fair bit of anxiety about the Fed’s tightening efforts. There have been 11 rate-tightening cycles in the last 60 years; of those, eight have culminated in recession.
4. Is 50 basis points the biggest one-time rate hike we’ll see this cycle?
I would say “probably” based on the Fed’s historical track record, but that’s not guaranteed. The last time we saw a 75-basis-point boost was all the way back in 1994. Fed Chairman Jerome Powell has said the central bank is not “actively considering” a 75-basis-point rate increase currently…but that’s not the same thing as saying it won’t be considered at all.
5. You are the education director for Augusta Precious Metals. Please share with us what your company offers and were we may get more information.
You can visit the official website at AugustaPreciousMetals.com.
About Devlyn Steele:
Devlyn Steele began in 1983 as a financial analyst for Butler Aviation and went on to work for UPS and People’s Express Airlines. As his career has progressed, he’s been an analyst in various industries, from finance, manufacturing, and technology to venture capital and more. He has sat on the boards of several Silicon Valley and technology companies and still does.
He is a member of the Harvard School of Business analytics program and predicted the housing crash in 2008 and the rise in gold and silver that followed.
Devlyn is an avid investor in all markets: real estate, stocks, gold and silver, and cryptocurrencies, and is a gold bull.
Devlyn is the director of education for Augusta Precious Metals. His focus as an analyst is primarily on Federal Reserve policies that can affect the dollar and precious metals.
CONTACT: To schedule an interview with Devlyn Steele, email jerry.specialguests@gmail.com
