Fed’s Announce a More Moderate Interest Rate Hike

A glimmer of light appeared at the end of the rising interest rate tunnel following the news release by the Federal Reserve Open Market Committee (FOMC). Although decisions were made to raise the federal funds rate as the Fed’s pursue efforts to achieve an inflation rate of 2%, it was a more moderate 25 basis points to a range of 4 ½ to 4 ¾ percent in comparison to the preceding increases of 50 basis points in mid-December which preceded the more aggressive four consecutive 75 basis point hikes going back to June 2022. The Fed anticipates further increases to the federal funds rate, and in determining the extent of future increases to the target range, the FOMC “will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.” Although the annual inflation rate has “eased somewhat,”— down from the peak of 9.1% in June to 6.5% as measured by the consumer price index in December, the increases “have already sparked downturns in housing and stock markets, and a growing number of experts worry the turmoil could ultimately spark a deep global recession.”

Source:    https://www.federalreserve.gov/newsevents/pressreleases/monetary20230201a.htm  

Source:    https://www.forbes.com/sites/jonathanponciano/2023/02/01/fed-raises-rates-another-25-basis-points-signals-more-hikes-still-to-come/