The Federal Open Market Committee (FOMC) and Fed chair Jerome Powell convened a press conference on Wednesday to discuss the state of the American economy, the central bank’s intentions to combat inflation, and the current Russia-Ukraine conflict. The FOMC voted to raise the benchmark bank rate by a quarter percentage point, according to Powell, who also stated that “ongoing increases…will be appropriate.”
The Federal Reserve has raised the benchmark interest rate.
The Federal Reserve raised the benchmark interest rate from near zero to 0.25 percent for the first time since the Covid-19 pandemic began, aiming for a range of 0.25 percent to 0.50 percent.
On Wednesday, Fed Chair Jerome Powell announced the rate hike after citing the ongoing conflict between Russia and Ukraine, and he cautioned that “the ramifications for the US economy are quite unknown.”
Powell soon clarified that the FOMC hiked the benchmark bank rate by a quarter percentage point and that “ongoing increases…will be appropriate” after remarking that the US economy, particularly the jobs sector, was showing strength.
Powell also mentioned the Fed’s purchase programme being tapered back, but said that information on that particular arrangement would be revealed at a later meeting. The Fed last raised the key interest rate in December 2018, far before the Covid-19 pandemic.
The Fed’s post-meeting statement also mentioned decreasing the balance sheet of the US central bank at the next FOMC meeting. “At a future meeting,” the post-meeting statement says, “the committee plans to begin reducing its holdings of Treasury securities, agency debt, and agency mortgage-backed securities.”
In addition to the quarter-percentage-point boost, the FOMC anticipates six further rate hikes at each meeting. Furthermore, the central bank intends to raise rates three more times next year.
“The committee is committed to taking the necessary steps to re-establish price stability. “The United States economy is quite strong and well-positioned to handle tighter monetary policy,” Fed Chairman Jerome Powell said at his press conference.
Inflation in the United States is still high, according to the Federal Reserve.
Following the rate hike, economist and gold enthusiast Peter Schiff took to Twitter to express his displeasure with the Fed’s decision. “Inflation is the only reason the Fed raised rates,” Schiff stated. “Prior admitting that inflation was not temporary, the Fed had no plans to raise interest rates in 2022.” Given current geopolitical dangers and economic and financial market weakness, the Fed has run out of reasons to keep rates at zero.”
In post-meeting statements, the Federal Reserve admitted that inflation remained high. “Inflation remains elevated,” the FOMC rate hike announcement adds, “reflecting supply and demand imbalances connected to the pandemic, rising energy prices, and broader pricing pressures.”
Meanwhile, after the FOMC rate rise decision, the popular US indexes Nasdaq, Dow Jones Industrial Average, NYSE, and S&P 500 all remained in the green. After a modest spike during Wednesday’s early morning trading sessions, crypto economy markets have stayed stable (ET).
Following the FOMC remarks, the crypto economy is still up 1.2 percent in the last 24 hours. In the previous 24 hours, the price of one ounce of.999 pure gold has dropped 0.17 percent. At press time, one ounce of gold was trading for $1,914 per ounce, down 7.08 percent from its recent all-time high of $2,060.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.