(Finance) – The Fed fully respects expectations and announces a new one maxi interest rate increase of 75 basis points, disappointing only that small fringe of those who bet on a net increase of 100 basis points. The Federal Open Market Committee has therefore decided to increase the target range for the Fed Funds rate at 2.25-2.5%, with a 75-point increase over the previous range, and considers continued rate hikes as appropriate.
Jerome H. Powell, chairman, voted in favor of monetary policy action; John C. Williams, vice president; Michael S. Barr; Michelle W. Bowman; Lael Brainard; James Bullard; Susan M. Collins; Lisa D. Cook; Esther L. George; Philip N. Jefferson; Loretta J. Mester; and Christopher J. Waller.
In assessing the appropriateness of monetary policy, the Committee “will continue to monitor the implications” on the economic prospects and it is said “willing to adapt the orientation appropriately monetary policy should risks arise that could prevent the achievement of the objectives. “The Committee’s assessments will take into account a wide range of information, including readings on public health, labor market conditions, inflationary pressures and expectations of inflation and financial and international developments.
The Committee also confirmed that will continue to reduce the assets in the portfolio (securities and mortgage-backed securities) as planned last May, when the Fed began the process of reducing the balance sheet.
“The Committee is firmly committed to bringing inflation back to its 2% target”the statement states, confirming that inflation remains high and reflects supply and demand imbalances linked to the pandemic, rising food and energy prices and wider price pressures.
“Consumption and production have slowed, but job gains have been robust in recent months and the unemployment rate has remained low,” the FOMC points out, reiterating that “Russia’s war against Ukraine is causing enormous human and economic difficulties “.
“The war and related events – it is stated – are creating further upward pressure on inflation and are weighing on global economic activity”. The FOMC thus reiterates the validity of its double mandate to reach the maximum employment and target inflation of 2% in the long run.