Federal Reserve raises benchmark interest rate by 0.25%, disinflationary process underway, says Jerome Powell

The U.S. Federal Reserve raised its benchmark federal funds rate by 0.25% on Wednesday, after markets assessed with near 100% certainty that the Federal Open Market Committee (FOMC) would codify the quarter-point increase. The FOMC statement said the ongoing rate hikes should bring inflation back into the 2% target range.

FOMC outlines expectations for future rate hikes.

The U.S. central bank on Wednesday raised the federal funds rate, increasing it by 0.25% to the current range of 4.5% to 4.75%. The FOMC detailed in a statement that indicators show that there has been “modest growth in spending and output” and that employment gains have been “robust in recent months“. However, the committee says that while inflation has fallen, it “remains high“, and he believes that the conflict in Ukraine “causes enormous human and economic difficulties.“

“Committee seeks maximum employment and 2% inflation in the long run“, the FOMC statement said. “In support of these objectives, the committee decided to raise the target range for the federal funds rate to 4-1/2 to 4-3/4 percent. The committee anticipates that continued increases in the target range will be appropriate to achieve a monetary policy stance that is sufficiently restrictive to return inflation to 2 percent over time.“

The federal funds rate has been raised eight times in a row and is now at its highest level in about 15 years. The Federal Open Market Committee has stated that “continued increases“would be appropriate at every meeting since March. Market analysts and investors have shown mixed signals regarding Fed rate hikes, with some expecting the central bank to ease its stance, and others anticipating Jerome Powell to continue raising the benchmark interest rate. Wednesday’s Fed rate hike was the lowest since March 2022.

On Wednesday, Jerome Powell said that monetary tightening will continue “until the job is done” and added that “the disinflationary process that is now underway is really only in its infancy.“The crypto market didn’t seem rattled by the Fed’s decision on Wednesday, and prices jumped 0.9% after Powell’s comments. Bitcoin (BTC) rose 1.4 percent and ethereum (ETH) jumped more than 2 percent.

After slipping during early morning trading on Wednesday, U.S. stocks regained most of their losses after the Federal Open Market Committee statement. All four benchmark U.S. stock indexes are in the green as Wednesday’s closing bell approaches. Precious metals such as gold and silver also posted gains, with gold up 0.79% and silver up 0.72% following the Fed’s statement.