The Federal Reserve raised rates for the first time since 2023. That was three years ago. Warsh says inflation is still too high. He's right. Inflation hasn't been low. It's been persistent. The Fed responded by doing the thing they stopped doing three years ago.
A quarter point. Twenty-five basis points for the people who need to sound important at parties. The Fed's benchmark rate goes up by the smallest increment that still counts as movement. They could have done fifty. They could have done nothing. They split the difference between commitment and cowardice.
Retail traders spent the morning googling "what does basis point mean" and "is quarter point bad for my Tesla calls." The answer to the second question is yes. The answer would have been yes regardless of what the Fed did. Tesla calls expiring Friday were always going to zero. The Fed just gave them someone to blame besides themselves.
Warsh delivered the inflation line with the confidence of a man stating that water is wet. Inflation remains elevated. Prices continue rising. The Fed's mandate includes price stability. So they raised rates. This is how central banking works when you strip away the theater. Problem persists. Turn the dial. Wait six months. Repeat.
The last hike was 2023. The next hike is whenever Warsh decides inflation is still too high again. Between those two points, thousands of traders will convince themselves they've cracked the Fed's timing. They'll buy the dip. They'll sell the rip. They'll post screenshots of their portfolios during the good weeks and go silent during the bad months.
The Fed doesn't care about your technical patterns. They care about inflation. Inflation is too high. So they hiked. The most predictable outcome delivered in the most predictable way, and somehow retail still acted surprised.
Photo by Markus Winkler on Unsplash
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