Federal Reserve increases the reference interest rate by 0.25 %, disinflation process early, says Powell - Economics

The US Federal Reserve increased its guiding interest rate by 0.25 %on Wednesday, after the markets had priced in with almost 100 percent certainty that the Federal Open Market Committee (FOMC) would codify the increase by a quarter point. The FOMC declaration further stated that persistent interest rate increases will reduce inflation to the target area of 2 %.

fomc outlined expectations for future interest rate increases

The Central Bank of the United States increased the Federal Funds Rate by 0.25 % to the current range of 4.5 % to 4.75 % on Wednesday. The Fomc detailed in a explanation that there has been an "modest growth of the expenses and production" Workplace growth have been "robust in the past few months". However, the committee says that inflation has dropped, but "remains increased", and it believes that the conflict in Ukraine "causes enormous human and economic difficulties".

"The committee is aiming for maximum employment and an inflation rate of 2 percent in the long term," explains the FOMC declaration. "In order to support these goals, the committee decided to raise the target area for the Federal Funds Rate to 4-1/2 to 4-3/4 percent. The committee assumes that continuous increases in the target tape will be appropriate to achieve a monetary policy that is sufficiently restrictive to bring inflation back to 2 percent over time."

The Federal Funds Rate has been increased eight times in a row and has now been at the highest level in about 15 years. The Federal Open Market Committee has explained that "ongoing increases" have been appropriate at every session since March. Market analysts and investors have shown contradictory signals regarding the Fed interest rate increases, some of which assume that the central bank will loosen its attitude, and others assume that Jerome Powell will continue to raise the key interest rate. The interest rate increase of the Fed on Wednesday was the smallest since March 2022.

on Wednesday, powell said that the monetary policy was continued, "until the work is done", and added that the "current disinflation process really in one Early stage ”. The crypto economy seemed unimpressed by the decision of the Fed on Wednesday, and prices rose by 0.9 %according to Powell's comments. bitcoin (btc) rose by 1.4 % and ether (ETH) jumped more than 2% higher.