PremiumThe US Federal Reserve raised their main interest rate by three-quarters of a percentage point – the biggest increase since 1994 – as widely expected by traders. The data suggest the Federal Open Market Committee (FOMC) may need to act more decisively, slowing consumer and business spending and the job market to bring prices under control.
Jerome Powell says Fed could hike rates by 0.75 again in July. He also said that Fed has tools, 'resolve' to bring inflation down. “I do not expect moves of this size to be common, but an increase of 0.5 or 0.75 percentage points is likely at its next meeting," Powell said.
The Dow Jones Industrial Average was up 157 points, or 0.5%, at 30,508, after rising 397 points at its session high.
The S&P 500 was up 32 points, or 0.9%, at 3,768.
The Nasdaq Composite gained 181 points, or 1.7%, to trade at 11,016.
- The Fed raised its benchmark rate by 75 basis points -- the biggest increase since 1994 -- to a range of 1.5%-1.75%
- New dot-plot projections showed sharp increase from March, with federal funds target rising to 3.4% by year-end -- implying another 175 basis points of tightening this year -- and 3.8% in 2023, before falling to 3.4% in 2024; prior forecasts in March were for a 1.9% rate this year and 2.8% in 2023 and 2024
- FOMC adds a line saying it's “strongly committed to returning inflation to its 2% objective" and removes prior language that said the FOMC “expects inflation to return to its 2% objective and the labor market to remain strong"
- Economic projections showed a much bumpier soft landing expected, with the unemployment rate rising from 3.7% at end-2022 to 4.1% in 2024; growth forecasts were cut to 1.7% in 2022 and 2023, from 2.8% and 2.2% in March; Fed officials still expect inflation to come down significantly in 2023
- Reiterates path on balance-sheet reduction that took effect June 1, shrinking bond portfolio by $47.5 billion a month and stepping up to $95 billion in September
The US dollar extended its gains on Wednesday, after the Federal Reserve raised its target interest rate by three-quarters of a percentage point to stem a disruptive surge in inflation.
The US Dollar Currency Index, which tracks the greenback against six major currencies, was up 0.35% at 105.66.
Oil fell after the Federal Reserve delivered the biggest rate increase in almost three decades and US government report showed signs of demand slipping.
US Stocks climbed with bonds after the Fed delivered its biggest rate increase in nearly 30 years. The S&P 500 rebounded after almost wiping out its gains following the Fed decision. Treasury two-year notes briefly erased their advance and the dollar fluctuated.
About the new announcement and economic projections, Matthew Luzzetti, chief US economist at Deutsche Bank, said, “The Fed is very clearly showing commitment to getting inflation under control even if it comes at the expense of slower growth and a higher unemployment rate."
Federal Reserve officials raised their main interest rate by three-quarters of a percentage point -- the biggest increase since 1994 -- and signaled they will keep hiking aggressively this year, resorting to drastic measures to restrain the rampant inflation they failed to forecast. Read more
About few minutes after the US Fed decision, the S&P 500 has given up some of its earlier gains and is up about 0.5%. All three major US indexes remained in the green.
- China Covid lockdowns exaggerating
- Economic activity picked up in Q2
- Boosts unemployment rate outlook
- Boosts 2022 core inflation outlook to 4.3%
US two-year treasury yields rise to 3.356% after Fed statement, following brief earlier drop.
The Fed's policy-setting Federal Open Market Committee reaffirmed that it remains "strongly committed to returning inflation to its 2 percent objective" and expects to continue to raise the key rate.
Committee members now see the rate ending the year at 3.4 percent, up from the 1.9 percent projection in March, according to the median quarterly forecast.
US Fed hikes interest rate by 75 bps to 1.75%, the biggest hike in 28 years. The Fed also anticipates an additional increase in fund rates.
Global shares and government bonds rallied on Wednesday ahead of what is expected to be the largest US interest rate rise since 1994, as investors cast aside fears of slowing economic growth and instead looked for bargains among beaten-down stocks.
The European Central Bank earlier today held an unscheduled meeting to discuss market rout and unveiled plans for a plans for a new support scheme to avoid a debt crisis due to rising borrowing costs by supporting high-debt member states and devising a new crisis tool to manage the risks.
Indian stock markets were muted as investors turned cautious ahead of the US Federal Reserve's decision on interest rates. The Fed is to announce its rate decision at 11:30 pm tonight. In noon trade, Sensex was slightly in green while Nifty remained near 15,750. Some analysts say that Fed’s aggressive stance is largely factored in so possibility of a negative surprise is low. Read FULL REPORT
Oil prices fell more than 1% on Wednesday as investors worried an expected big hike in U.S. interest rates by the Federal Reserve could slam fuel demand and global economic growth as U.S. oil production reached pre-pandemic levels.
Wall Street stocks opened higher Wednesday following a report showing disappointing US retail sales as markets await the Federal Reserve's latest response to inflation.
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