The US Federal Reserve raised its benchmark federal funds rate by 0.25% on Wednesday after markets quoted near 100% certainty that the Federal Open Market Committee (FOMC, for its acronym) would encode the increase of a quarter point. The FOMC statement further detailed that continued rate increases are expected to bring inflation down to the 2% target range.
The FOMC outlines expectations for future rate hikes
The US central bank raised the federal funds rate on Wednesday, raising it by 0.25% to the current range of 4.5% to 4.75%. the FOMC detailed in a statement that indicators show that there has been “modest growth in spending and output” and that job creation has been “robust in recent months.” However, the committee says that while inflation has decreased, it “remains high” and believes that the conflict in Ukraine is “causing tremendous human and economic hardship.”
“The committee seeks to achieve maximum employment and inflation at a rate of 2 percent over the long term,” the FOMC statement details. “In support of these goals, the committee decided to raise the target range for the federal funds rate from 4-1/2 to 4-3/4 percent. The committee anticipates that continued increases in the target range will be appropriate to achieve a monetary policy stance that is tight enough to return inflation to 2 percent over time.”
The federal funds rate has been raised eight times in a row and is now at its highest level in about 15 years. The Federal Open Market Committee has stated that “continuing increases” would be appropriate at every meeting since March. Market analysts and investors have given mixed signals about the Fed’s rate hikes, with some expecting the central bank to soften its stance and others anticipating Jerome Powell to continue raising the benchmark interest rate. The Fed’s rate hike on Wednesday was the smallest since March 2022.
On Wednesday, Powell saying that monetary tightening will continue “until the job is done” and added that the “disinflationary process now underway is really in its early stages.” He crypto economy seemed unfazed by the Fed’s decision on Wednesday, and prices rose 0.9% after Powell’s comments. Bitcoin (BTC) rose 1.4% and Ethereum (ETH) jumped over 2% higher.
After falling during early trading sessions on Wednesday, US stocks recouped most of their losses following the Federal Open Market Committee’s statement. All four benchmark US stock indices are in the green as the closing bell approaches on Wednesday. precious metals like Gold and silver It also posted gains, with gold rising 0.79% and silver 0.72% after the Fed statement.
What do you think about the Federal Reserve’s decision to raise the benchmark interest rate and how will it affect the economy in the long run? Let us know your thoughts on this topic in the comments section below.
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