BREAKDOWN: How Markets Are Interpreting the Fed’s First Hike Since 2018

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4.7 • 698 Ratings

🗓️ 17 March 2022

⏱️ 16 minutes

🔗️ Recording | iTunes | RSS

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Summary

Is a 25 basis point hike enough to stem the impact of inflation? This episode is sponsored by Nexo.io, Arculus and FTX US. Wednesday, the U.S. Federal Reserve increased its benchmark interest rate for the first time since 2018. This came despite an increasingly volatile economic landscape that includes the fallout from Russia’s invasion of Ukraine plus the supply chain impacts of COVID-19 shutdowns in China. NLW breaks down the market’s reaction to the anticipated hike, and explores how quantitative tightening is likely to proceed from here. - Take your crypto to the next level with Nexo. Invest and swap instantly, earn up to 20% APR on your idle assets or borrow cash against them at industry-leading rates. Get started today at nexo.io to receive up to a $100 welcome bonus. Valid through March 31. - Arculus™ is the next-gen cold storage wallet for your crypto. The sleek, metal Arculus Key™ Card authenticates with the Arculus Wallet™ App, providing a simpler, safer and more secure solution to store, send, receive, buy and swap your crypto. Buy now at amazon.com. - FTX US is the safe, regulated way to buy Bitcoin, ETH, SOL and other digital assets. Trade crypto with up to 85% lower fees than top competitors and trade ETH and SOL NFTs with no gas fees and subsidized gas on withdrawals. Sign up at FTX.US today. - Consensus 2022, the industry’s most influential event, is happening June 9–12 in Austin, TX. If you’re looking to immerse yourself in the fast-moving world of crypto, Web 3 and NFTs, this is the festival experience for you. Use code BREAKDOWN to get 15% off your pass at www.coindesk.com/consensus2022. - “The Breakdown” is written, produced by and features Nathaniel Whittemore aka NLW, with editing by Rob Mitchell, research by Scott Hill and additional production support by Eleanor Pahl. Adam B. Levine is our executive producer and our theme music is “Countdown” by Neon Beach. The music you heard today behind our sponsor is “I Don't Know How To Explain It” by Aaron Sprinkle. Image credit: Nuthawut Somsuk/Getty Images, modified by CoinDesk. Join the discussion at discord.gg/VrKRrfKCz8. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Transcript

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0:00.0	Welcome back to The Breakdown with me, NLW.
0:09.1	It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world.
0:15.0	The breakdown is sponsored by nexo.io, Arculus, and FtX, and produced and distributed by CoinDesk.
0:22.8	What's going on, guys? It is Thursday, March 17th, and today we are talking about the absolute
0:28.1	tightrope that the Federal Reserve is walking as they try to tighten monetary policy in the context
0:35.1	of extremely hot inflation, slowing growth, and of course, serious
0:40.7	geopolitical disruption in the form of both the war in Ukraine, as well as in the context of
0:47.2	Chinese COVID-19 lockdowns. Before we get into that, however, if you are enjoying the breakdown,
0:53.2	please go subscribe to it wherever you listen to podcasts, give it five stars, leave a review, or if you want to get deeper into the conversation, come join us on the Breakers Discord.
1:04.0	You can find a link in the show notes or go to Bit.ly slash Breakdown Pod.
1:08.0	Also, a disclosure, as always, in addition to them being a sponsor of the show,
1:12.8	I also work with FTX. Now, we are back on our macro BS again, and it was Fed Day yesterday.
1:21.9	This Federal Open Markets Committee meeting has been highly anticipated, and if you listen to
1:27.2	this show regularly, you have most of
1:29.0	the background. But in brief, 2021 from a Fed perspective, was transitory land. It was the great
1:35.3	debate between the Fed who said that inflation was transitory, the product of dislocations
1:40.8	that happened in the wake of COVID-19 that would naturally work themselves out,
1:45.1	and the rest of the market, who basically said, no, it's not.
1:48.2	As inflation kept creeping throughout the year, the Fed finally had to concede the point,
1:53.8	and their language in tone shifted pretty dramatically in the late fall and early winter.
1:59.4	The language changed around the Powell renomination, which was all
2:02.9	focused on having the tools to fight inflation. By the December FOMC meeting, the Fed was talking
	...

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