The Fed approved a 0.25 percentage point rate hike. New target range for fed funds rate is 25-50 basis points.
By IftikharPost – March 17, 2022 at 13:00 AEST.
  • Federal Reserve approved a 0.25 percentage point rates hike, the first increase since December 2018.
  • New target range for fed funds rate is 25-50 basis points.

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Federal Reserve Chairman Jerome Powell  - Source Flickr
Federal Reserve Chairman Jerome Powell  – Source Flickr

The US Federal Reserve (Fed) raised interest rates by 25 basis points today, marking the first rate hike in more than three years, sees six more ahead as well.

As per press release, After keeping its benchmark interest rate anchored near zero since the beginning of the Covid pandemic, the policymaking Federal Open Market Committee said it will raise rates by a quarter percentage point, or 25 basis points.

“Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices and broader price pressures,” “The implications for the U.S. economy are highly uncertain, but in the near term the invasion and related events are likely to create additional upward pressure on inflation and weigh on economic activity.”

the Fed said in a statement.

The FOMC’s statement noted key contingencies that may affect the future course of monetary policy. One was Russia’s war on Ukraine. The statement said:

“The invasion of Ukraine by Russia is causing tremendous human and economic hardship.”

The statement indicated that the FOMC will be reducing its holdings of U.S. Treasury securities, U.S. agency debt, and U.S. agency mortgage-backed securities (MBS). However, this decision will be made at an unspecified future meeting.

Traders were likely watching whether the Fed’s comments would be “dovish” or “hawkish,” two terms used to describe an either cautious or more aggressive path ahead by the Fed.

Committee members are also predicting much slower gross domestic product growth for 2022 that what they predicted before. They now see 2.8% growth, down from the 4% growth they estimated in December.

Keep Tuned for more update soon.


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