Fed Hikes Benchmark Bank Rate for the First Time Since 2018 – FOMC Expects 6 More Increases – 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 declared the rate hike after citing the current conflict between Ukraine and Russia, and he cautioned that “the consequences 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 addressed the Fed’s purchase program being reduced, but said further details on that agreement would be announced at a later meeting. The last time the Federal Reserve hiked its main interest rate was in December 2018, well before the Covid-19 pandemic.
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The Fed’s post-meeting statement also suggested that the US central bank’s balance sheet would be reduced at the next FOMC meeting.
“At a future meeting,” the post-meeting statement states, “the committee intends to begin reducing its holdings of Treasury securities, agency mortgage-backed securities, and agency debt.”
The FOMC expects six more rate hikes at each meeting, in addition to the quarter-percentage-point increase. In addition, the Fed intends to boost rates three more times by the coming year.
“The committee is dedicated to taking measures to restore price stability,” the statement added. At his news conference, Fed Chairman Jerome Powell stated: “The United States economy is pretty strong and well-positioned to handle tighter monetary policy.”
Following the rate hike, economist and gold enthusiast Peter Schiff expressed his disappointment with the Fed’s decision on Twitter. “The only reason the Fed raised rates is because of inflation,” Schiff stated.
“Prior to admitting that inflation was not temporary, the Fed had no plans to raise interest rates in 2022.” The Fed no longer has any reasons to hold rates at zero, given present geopolitical risks and economic and financial market weakness.”
The Federal Reserve acknowledged that inflation remained high in post-meeting statements.
“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.”
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Meanwhile, the renowned US indexes Nasdaq, Dow Jones Industrial Average, NYSE, and S&P 500 all remained in the green following the FOMC rate hike decision. The crypto economy markets have remained calm after a brief increase during Wednesday’s early morning trading sessions.
The crypto economy is still up 1.2 percent in the last 24 hours following the FOMC speech. The price of one ounce of.999 pure gold has likewise declined 0.17 percent in the last 24 hours. Gold was going for $1,914 per ounce at press time, down 7.08 percent from its recent all-time high of $2,060.