Fed Raises Rates Again, Powell Signals More to Come
Fed's Latest Move
The Federal Reserve raised interest rates by a quarter-percentage point Wednesday, marking the eighth increase since March 2022. The move brings the central bank's benchmark rate to a range of 4.5% to 4.75%, the highest level since October 2007.The decision was widely expected by economists and investors. The Fed has been raising rates aggressively in an effort to combat high inflation, which has reached a 40-year high.
Powell's Press Conference
Following the rate hike, Fed Chairman Jerome Powell held a press conference to discuss the decision. Powell said that the central bank is "strongly committed to bringing inflation back down to our 2% goal."Powell also signaled that the Fed is likely to continue raising rates in the coming months. He said that "ongoing increases in the target range will be appropriate" to bring inflation under control.
Market Reaction
The stock market reacted negatively to the Fed's decision and Powell's comments. The Dow Jones Industrial Average fell more than 300 points, while the Nasdaq Composite Index dropped more than 100 points.The yield on the 10-year Treasury note also rose, reflecting investors' expectations for higher interest rates in the future.
Economic Outlook
The Fed's rate hikes are expected to slow economic growth. The central bank projects that GDP will grow by just 0.5% in 2023, down from 2.1% in 2022.The Fed also expects unemployment to rise slightly in the coming months. The central bank projects that the unemployment rate will reach 4.6% by the end of 2023, up from 3.5% in December 2022.
What's Next
The Fed's next meeting is scheduled for March 21-22. The central bank is expected to raise rates again at that meeting, although the size of the increase is uncertain.The Fed will also release new economic projections at that meeting. Those projections will provide more insight into the central bank's outlook for the economy and inflation.
تعليقات