The FED increases the interest rates by a quarter percent point
The FED increases the interest rates by a quarter percent point
- The central bank announced six further interest rate increases this year
- Inflation will probably not go back before mid -2022, said Powell
In order to contain inflation, the Federal Reserve increased the key interest rate by a quarter percent point, the first increase since 2018. The central bank signaled that there will be seven further interest rate increases in 2022.
The increase takes place because the Fed is faced with a number of challenges that are associated with persistent problems in the supply chain, rising energy prices and the latest invasion in Russia in Ukraine.
"The economy is very strong, and against the background of an extremely tense labor market and a high inflation, the committee assumes that ongoing increases in the target tape for the key interest rate will be appropriate," said the chairman of the Fed, Jerome Powell press conference after the publication of the Federal Open Market Committee (FOMC) on Wednesday.
There are seven other FOMC sessions this year, said Powell, and seven other hikes are imminent. December fed Finen eight interest now, and the likelihood of nine interest rate increases has been tripled.
The markets easily broke, with Bitcoin lost about 1.2 % and the S&P 500 and the Dow Jones Industrial Index fell by less than 1 % in half an hour after the report was published.
Analysts were not surprised and commented that an interest rate increase was priced by 0.25 basis on both the stock and cryptocurrency markets.
"In my opinion, the amount is too low at the moment to play a role, and the amount of the increase is irrelevant," said Jason Brady, President and CEO of Thornburg Investment Management.
The "more important headlines" currently concern Ukraine, the gasoline price and the supply chain, said David Tawil, President of the crypto hedge fund company Prochain Capital.
The Fed does not expect the inflation pressure until the middle of the year, said Powell.
"We assume that inflation will remain high until the middle of the year and start to decrease and then will decrease even more next year," he said.
Even with increasing inflation, Powell does not see that the United States is in danger of getting into a recession, he said, since households and companies are currently in a healthy financial constitution.
"In my opinion, the probability of a recession is not particularly high within the next year," said Powell.
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The contribution Fed increases the interest rates by a quarter percentage point is not financial advice.