FOMC Meeting Results- Fed Raises Rate by a Quarter-Point
The Federal Reserve’s policy committee lifted interest rates by a quarter of a percentage point today, the 10th hike of this current cycle.
The Federal Reserve raised its benchmark interest rate by a quarter of a percentage point Wednesday, in what markets have been betting will be the last increase of this series.
A statement from officials explaining the move and detailing the bank’s views of the economy indicates the Fed believes it can move ahead in its fight against inflation despite concerns about the banking system.
Officials called the U.S. banking system “sound and resilient” in their statement on Wednesday. They noted that it was too early to quantify the extent of the impact banks potentially pulling back on lending would have on the economy and inflation.
The move leaves the bank’s target for the fed-funds rate at 5.0% to 5.25%, a level not seen since the Fed cut rates in the autumn of 2007.
The statement suggests that this may be the last increase of the current series. It no longer includes the phrase “the Committee anticipates that some additional policy firming may be appropriate” in order to get the annual inflation rate down to the bank's 2% target.
Policy makers will study the incoming data and take into account the lag with which the tightening they have already done acts on the economy. Wednesday’s rate increase was the 10th in a little more than a year.
The statement noted that the economy continues to expand “at a modest pace” with robust gains in employment and inflation that remains elevated.
The vote to increase the fed-funds rate was unanimous. The Fed will also continue to sell its Treasury and mortgage-backed securities holdings as it works to shrink its multi-trillion dollar balance sheet.
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