The Fed raised its benchmark interest rate by three-quarters of a percentage point to a range of 1.50% to 1.75%, the biggest increase since 1994.
After the announcement of the interest rate rise, the U.S. stock plunged in the short term, since then straight up.At press time, the Dow was up 1.3%, the NASDAQ 2.7%, and the S&P 500 1.7%
A big 75 basis point hike
The Fed said it was highly concerned about inflation risks, was “strongly committed” to returning inflation to 2 per cent and reiterated its view that continued rate increases were appropriate.
The United States Federal Open Market Committee (FOMC) released economic forecasts, 2022, 2023, 2024 end of the federal funds rate is expected to median 3.4%, 3.8%, 3.4%;The median GDP growth forecast for 2022, 2023 and 2024 is 1.7%, 1.7% and 1.9% respectively.The Fed is expected to start cutting rates in 2024.
We are firmly committed to bringing inflation down and have the tools we need to restore price stability,” Fed Chairman Jerome Powell said at a press conference after the decision.Inflation has to come down to help people get jobs, and it’s clear right now that the labor market is extremely tight and inflation is too high;Better balance between supply and demand in the Labour market is expected and moderate wage growth.
Mr Powell also said the pace of interest rate increases would depend on incoming data, with a 50 basis point or 75 basis point increase most likely at the next meeting, with 75 basis point increases not expected to become the norm.
Earlier, Powell attended the regular press conference in May, regarding the pace of future interest rate hikes, he said, “The next two monetary policy meetings of 50 basis points is possible, but he is not actively considering the possibility of a single 75 basis point rate hike.”
It can be found that the Federal Reserve has raised interest rates twice this year, by 25 basis points on March 17.On May 5th, it raised interest rates by 50 basis points.
After the RELEASE of the US CPI data in May that exceeded expectations, it is still a high probability event for the Federal Reserve to raise interest rates by 50 basis points in July, and the market expects that the probability of further raising interest rates by 50 basis points in September increases.Total rate increases are expected to surge to 300 basis points this year (about 12 quarter-point moves).