US Fed raises rates 25 basis points, sees “ongoing” hikes
The US Federal Reserve (the “Fed”) raised interest rates by 25 basis points, in a move that was correctly anticipated by the vast majority of analysts and market participants.
The part that was not anticipated, however, was the Fed’s statement that “ongoing increases... will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time.”
US markets sold off in response to the decision, with the Dow Jones Industrial Average down more than 300 points as of this writing (3:30 AM). The Fed will meet in late March to discuss the next round of hikes.
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This is in-line with the Fed’s “rates will be higher for longer” messaging that attempted to manage the market's expectations.
Despite some positive news in the fight against inflation, this forward guidance should tell us that the Fed will remain “hawkish” (using interest rates to suppress inflation) and that a pivot (a pause, or reversal toward a policy of lowering rates) is not happening in the near future.
The Fed acknowledged that inflation appears to be “easing”, but that it is still elevated.
So while the Fed didn’t say that additional increases “will” be needed, it doesn’t sound like they’re taking their finger off the trigger of the Increase Interest Rates Gun just yet.
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Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.
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