The hottest ’90s trend, according to the Fed
Remembering a 75 basis point hike.
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• less than 3 min read
A journey through the annals of personal finance history.
November 15, 1994: What a time to be alive. TLC’s second album, CrazySexyCool, dropped. Mariah Carey’s All I Want for Christmas is You was just a few weeks old. And the Fed, led by Alan Greenspan, hiked interest rates by 75 basis points, from 4.75% to 5.5%.
If you can imagine, this increase was implemented to prevent inflation from getting out of hand, along with a string of other hikes. It worked.
Why are we talking about this today? While we’re past the point of avoiding inflation, St. Louis Fed President James Bullard reminded us on Monday that a steep hike like this is an option to cool down price increases.
Economists caution that a 75 basis point increase should be like that Papa Roach song—a Last Resort. But it helps to remember that the Fed has used a 0.75% increase successfully before.—Myriam
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