Fed Raises Benchmark Bank Rate by 25bps
The U.S. Federal Reserve has once again raised the federal funds rate by 25bps after pausing the month prior. Here are the key points:
- The rate hike was widely expected, with a 99% probability according to CME’s Fedwatch tool.
- The FOMC expressed concern about tighter credit conditions impacting economic activity, hiring, and inflation.
- The Fed aims for a 2% annual inflation rate in the long term.
- The target range for the federal funds rate is now 5-1/4 to 5-1/2 percent.
- Former Fed chair Ben Bernanke and many economists suggest this could be the final hike.
The FOMC will closely monitor economic information and make adjustments to monetary policy if needed. The statement is similar to last month’s, but Fed chair Powell has suggested a rate move in September is possible.
Hot Take:
The Fed’s decision to raise rates shows its commitment to maintaining a strong economy. However, concerns about the impact of credit conditions raise uncertainty about future hikes. It will be interesting to see if this is indeed the final hike, as some experts suggest. Overall, the Fed’s vigilance and flexibility in monitoring the situation will be key in ensuring economic stability.
By
By
By
By
By