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The Fed raises interest rates by a quarter of a percentage point
The central bank announced six more rate hikes this year. Inflation is not expected to fall until mid-2022, Powell said. To curb inflation, the Federal Reserve raised the key interest rate by a quarter of a percentage point, the first increase since 2018. The central bank signaled there will be seven more rate hikes in 2022. The increase comes as the Fed faces a number of challenges related to ongoing supply chain issues, rising energy prices and Russia's recent invasion of Ukraine. “The economy is very strong and, against the backdrop of an extremely tight labor market and high inflation, the committee...
The Fed raises interest rates by a quarter of a percentage point
- Die Zentralbank kündigte dieses Jahr sechs weitere Zinserhöhungen an
- Die Inflation werde voraussichtlich nicht vor Mitte 2022 zurückgehen, sagte Powell
To curb inflation, the Federal Reserve raised interest rates by a quarter of a percentage point, the first increase since 2018. The central bank signaled there will be seven more rate hikes in 2022.
The increase comes as the Fed faces a number of challenges related to ongoing supply chain issues, rising energy prices and Russia's recent invasion of Ukraine.
“The economy is very strong, and against a backdrop of extremely tight labor markets and high inflation, the Committee believes that continued increases in the target range for the federal funds rate will be appropriate,” Fed Chairman Jerome Powell said press conference following the release of the Federal Open Market Committee (FOMC) statement on Wednesday.
There are seven more FOMC meetings this year, Powell said, and seven more hikes are coming. December Fed Financing futures are now pricing in eight rate hikes, and the likelihood of nine rate hikes has tripled since yesterday.
Markets fell slightly, with Bitcoin losing about 1.2% and the S&P 500 and Dow Jones Industrial Index each falling less than 1% in the half-hour after the report was released.
Analysts were not surprised and commented that both the equity and cryptocurrency markets were pricing in a 0.25 basis point rate hike.
“In my opinion, the amount is too small to matter right now and the size of the increase is irrelevant,” said Jason Brady, president and CEO of Thornburg Investment Management.
The “more important headlines” right now concern Ukraine, gasoline prices and the supply chain, said David Tawil, president of crypto hedge fund firm ProChain Capital.
The Fed doesn't expect inflation pressures to ease until the middle of the year, Powell said.
“We expect inflation to remain high until mid-year and start to fall and then fall even more next year,” he said.
Even with rising inflation, Powell doesn't see the U.S. at risk of falling into a recession, he said, because households and businesses are currently in healthy financial shape.
“In my view, the likelihood of a recession within the next year is not particularly high,” Powell said.
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The post Fed raises interest rates by a quarter of a percentage point is not financial advice.