Federal Reserve Announces a 50 Basis Point Rate Hike
On Wednesday, December 14, 2022, the Federal Reserve Open Market Committee (FOMC) announced a 50 basis point increase in the target range for the federal funds rate to 4 ¼ to 4 ½ percent, representing a slightly less aggressive increase in comparison to the four consecutive 75 basis point rate hikes made since June 2022. Although inflation remains inflated, decisions by the Fed were based upon robust job gains and the unemployment rate remaining low, along with recent indicators pointing to modest growth in spending and production. The announcement comes one day following the U.S. Department of Labor’s updated release of the Consumer Price Index for All Urban Consumers (CPI-U), which rose a more moderate 0.1 percent in November on a seasonally adjusted basis in comparison to the 0.4 percent increase in October. Although the energy index decreased 1.6 percent over the month, it was more than offset by the index for shelter, which rose 0.6 percent over the month — the largest contributor to the monthly all items increase. Over the last 12 months, the all items index increased 7.1 percent before seasonal adjustment, representing an improvement over the 7.7 percent increase in November.