The Federal Reserve raised its benchmark interest rate by 0.25% on Wednesday after markets priced in almost 100% certainty that the Federal Open Market Committee (FOMC) would codify the quarter-point hike. The FOMC statement went on to say that sustained interest rate hikes are expected to reduce inflation to the 2% target range. FOMC outlines expectations for future rate hikes The United States Central Bank on Wednesday raised the federal funds rate by 0.25% to the current range of 4.5% to 4.75%. The FOMC detailed in a statement that indicators show there was “modest growth in...
The Federal Reserve raised its benchmark interest rate by 0.25% on Wednesday after markets priced in almost 100% certainty that the Federal Open Market Committee (FOMC) would codify the quarter-point hike. The FOMC statement went on to say that sustained interest rate hikes are expected to reduce inflation to the 2% target range.
The United States Central Bank on Wednesday raised the federal funds rate by 0.25% to the current range of 4.5% to 4.75%. The FOMC detailed in a statement that indicators show there has been "modest growth in spending and output" and job gains have been "robust in recent months." However, the committee says that while inflation has fallen, it "remains elevated" and it believes the conflict in Ukraine is "causing enormous human and economic difficulties."
“The Committee aims to achieve maximum employment and 2 percent inflation over the long term,” the FOMC statement states. "In support of these objectives, the Committee decided to increase the target range for the federal funds rate to 4-1/2 to 4-3/4 percent. The Committee anticipates that continued increases in the target range will be appropriate to achieve monetary policy that is sufficiently restrictive to bring inflation back to 2 percent over time."
The federal funds rate has increased eight times in a row and is now at its highest level in about 15 years. The Federal Open Market Committee has said “rolling increases” would be appropriate at every meeting since March. Market analysts and investors have shown conflicting signals on Fed rate hikes, with some expecting the central bank to ease its stance and others expecting Jerome Powell to raise interest rates further. The Fed's rate hike on Wednesday was the smallest since March 2022.
On Wednesday, Powell said that monetary policy tightening would continue “until the job is done,” adding that the “disinflation process currently underway is truly at an early stage.” The Crypto economics seemed unfazed by the Fed's decision on Wednesday, with prices rising 0.9% following Powell's comments. Bitcoin (BTC) rose by 1.4% and Ethereum (ETH) jumped more than 2% higher.
After falling during early morning trading sessions on Wednesday, U.S. stocks recouped most of the losses following the Federal Open Market Committee's statement. All four US benchmark stock indexes are in the green as the closing bell approaches on Wednesday. Precious metals such as Gold and silver Also saw gains, with gold rising 0.79% and silver rising 0.72% following the Fed's statement.
What do you think of the Federal Reserve's decision to raise interest rates and how will this affect the economy in the long term? Let us know your thoughts on this topic in the comments section below.
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