Tough Times! US Savings Rate Hits New Low Since 2008, Fed Official Hawkish on Multiple 25-basis-point Rate Hikes

Facing the stagnant high inflation in the United States, Federal Reserve Board Governor Christopher Waller has once again turned hawkish. On the 30th, he stated that in order to curb inflation, interest rates will continue to rise before the end of the year. He supports a two-notch rate hike, even raising rates above the "neutral level" until the high inflation pressures that are troubling the U.S. economy subside.

According to Fed officials, the neutral interest rate estimated in March is 2.5%. Therefore, this means that Waller believes interest rates will need to increase by at least 2 percentage points from the current 0.75% to 1%, which is 8 notches.

Speaking at an event in Frankfurt, Germany, Waller stated that he could envision the Fed raising rates by two notches until inflation is under control, saying, "I don't see a reason to stop [raising rates] until we understand that."

"Over the longer term, we will better understand how monetary policy affects demand and how supply constraints evolve. If the data shows that inflation remains high, I am prepared to do more."

Christopher Waller's latest remarks support the Fed's May meeting minutes, where officials predicted a hawkish stance of raising rates by 2 notches at the June and July meetings, respectively.

However, American hedge fund investor Bill Ackman and economist Peter Schiff are not optimistic about the Fed's actions. Ackman believes that the Fed may need to aggressively raise rates to curb inflation or risk creating a market bubble. Schiff, on the other hand, does not believe that any action by the Fed will help alleviate inflation.

According to statistics from the U.S. Bureau of Economic Analysis, U.S. savings have plummeted to the lowest levels since the 2008 financial crisis triggered the "Great Recession." Peter Schiff stated:

"If the U.S. economy and household balance sheets are as strong as Powell claims, why have savings rates fallen to the lowest levels since the worst recession since the Great Depression? When times get tough, people dig into the savings they accumulated during the good times."

This article is authorized and reprinted from Horizon News Network