The Fed moves up its timeline for rate hikes as inflation rises

The Federal Reserve on Wednesday considerably raised its expectations for inflation this year and brought forward the time frame on when it will next raise interest rates.

However, the central bank gave no indication as to when it will begin cutting back on its aggressive bond-buying program, though Fed Chairman Jerome Powell acknowledged that officials discussed the issue at the meeting.

“You can think of this meeting that we had as the ‘talking about talking about’ meeting,” Powell said in a phrase that recalled a statement he made a year ago that the Fed wasn’t “thinking about thinking about raising rates.”

As expected, the policymaking Federal Open Market Committee unanimously left its benchmark short-term borrowing rate anchored near zero. But officials indicated that rate hikes could come as soon as 2023, after saying in March that it saw no increases until at least 2024. The so-called dot plot of individual member expectations pointed to two hikes in 2023.

Though the Fed raised its headline inflation expectation to 3.4%, a full percentage point higher than the March projection, the post-meeting statement continued to say that inflation pressures are “transitory.” The raised expectations come amid the biggest rise in consumer prices in about 13 years.

“This is not what the market expected,” said James McCann, deputy chief economist at Aberdeen Standard Investments. “The Fed is now signaling that rates will need to rise sooner and faster, with their forecast suggesting two hikes in 2023. This change in stance jars a little with the Fed’s recent claims that the recent spike in inflation is temporary.”

Markets reacted to the Fed news, with stocks falling and government bond yields higher as investors anticipated tighter Fed policy ahead, including the likelihood that the bond purchases will slow as soon as this year.

“If you’re going to get two rate hikes in 2023, you have to start tapering fairly soon to reach that goal,” said Kathy Jones, head of fixed income at Charles Schwab. “It takes maybe 10 months to a year to taper at a moderate pace. Then you’re looking at we need to start tapering maybe later this year, and if the economy continues to run a little bit hot, rate hikes sooner rather than later.”

Even with the raised forecast for this year, the committee still sees inflation trending to its 2% goal over the long run.

“Our expectation is these high inflation readings now will abate,” Powell said at his post-meeting news conference.

Powell also cautioned about reading too much into the dot-plot, saying it is “not a great forecaster of future rate moves. “Lift-off is well into the future,” he said.

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Bitcoin mining emissions in China will hit 130 million tonnes

The carbon emissions associated with mining bitcoin have accelerated rapidly in China, and they will soon outstrip the total annual emissions of mid-sized European countries.

Analysis by Guan Dabo at Tsinghua University in Beijing, China, and his colleagues suggests that the total carbon footprint of bitcoin mining in China will peak in 2024, releasing around 130 million metric tonnes of carbon.

This figure exceeds the annual carbon emissions of countries including Italy and the Czech Republic.

By 2024, bitcoin mining in China will require 297 terawatt-hours of energy and account for approximately 5.4 per cent of the carbon emissions from generating electricity in the country.

Mining bitcoin relies on computers racing to solve mathematical puzzles, with miners receiving bitcoin for being the first to process a batch of verified transactions.

The number of bitcoin awarded for this are halved every four years, and the puzzles have become more difficult and require more computing oomph to solve. The cost of powerful computer equipment and the electricity to run it has also increased.The researchers predicted the emissions peak in China in 2024 based on calculations of when the overall cost of mining – the investment in computing equipment and the electricity costs – outweighs the financial rewards of selling mined bitcoin.

They used both financial projections and carbon emissions analysis to model the emissions footprint in China, taking into account factors such as location. “Are you in Shanghai, Beijing, or other places? That does matter because it determines what type of electricity you use,” says Guan. “Overall, from all of China’s bitcoin mining activity, 40 per cent is powered by coal.”

Bitcoin miners in Beijing or other parts of northern China are very likely to be using electricity from coal-powered plants. Mining in southern provinces – especially Guizhou, Yunnan and Sichuan – is in large part powered by hydroelectricity, says Guan.

Given China’s commitment to a 2060 net-zero carbon goal, regulations to reduce carbon emissions from bitcoin mining and future emergent sectors will need to be implemented, he says.

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Deciding the Right Path to Success

There is no pre-set rules or text books available that can guide a young graduate to succeed in his corporate career. He merely needs to know what he truly desire and have a strong determination to reach his goal. Without it, it is unlikely anyone can succeed, even if he is blessed with a lot of good luck along the way. In addition, he needs to stay focus and consistent in his pursuit and not be distracted no matter what.

Keeping focused on your goal means that we’re purposely fading out everything that pulls you away from your goal. It’s a disciplined lifestyle of choosing to see every struggle throught the lens of a single mindedness pursuit.

Focus on your goal, not your proble. Listen to your heart, not your insecurities. Don’t focus on your adversaries instead focus on possibilities. Understanding the bigger picture and the purposes. Take a break and celebrate every little success that come your way. Reward yourself once you have completed a task and repeat the same with a bigger reward when you achieve a bigger task in the future. Keep doing it and be persistent.

At the end of the day, one also need be pragmatic and if need be to adjust your goal in line with the latest development, trend and changes in the market. For example, it be suicidal to still pursue a career in film based photography in light of digital era and son on.

Lessons

Dare to network from a very young age. Join in for social events and seminars. Collect contacts and keep in touch
Be curious and explore what is out there
Be “seen” in the social networks to keep others informed of your availability and progress constantly
Dare to reach out to senior level people, even if they don’t notice you
Focus on investing / creating a name for yourself where your skills set are sought after and notice
Avoid being a generalist, but rather a specialist where your skills are unique and become more valuable as you ages
Many of Robert’s peers that progress usually do not depend on job applications or headhunters but rather on ex colleagues and ex bosses who are impressed with their skills while they were together. You be surprised how one can quickly climb the corporate ladders bypassing the need to wait for the next long list of grades purposely created to slow down the progress of any employee because of this “connection” built over the years.

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