Powell stated that the FOMC had decided to raise the benchmark rate by 25% and noted that “ongoing increases…will appropriate strong>
Federal Reserve raises benchmark bank rate
The Federal Reserve has announced for the first time since the Covid-19 pandemic. It raised the benchmark interest rate from close to zero to 0.255% to achieve its target of 0.25% or 0.50%.
Jerome Powell, Fed chair, announced the rate increase on Wednesday. He mentioned the ongoing Russia-Ukraine conflict and stressed that the “implications for the U.S. economic are highly uncertain.”
Powell explained quickly that Powell had mentioned that the U.S. economic, and in particular the jobs sector, was showing strength. He also highlighted that the FOMC had raised the benchmark rate by 25% and that there would be “ongoing increases…”
Powell also spoke out in favor of reducing the Fed’s purchase program, but noted that more details would be revealed at a later meeting. The benchmark bank rate was last raised by the Fed in December 2018, well before the Covid-19 pandemic.
In its post-meeting statements, the Fed discussed the possibility of reducing the balance sheet of the U.S. central banks at the next FOMC meeting. The post-meeting statement details that the committee “expects to reduce its holdings in Treasury securities, agency debt, and agency mortgage-backed security at a forthcoming meeting.”
The FOMC expects six additional rate increases at every FOMC meeting, in addition to the quarter-percent increase. The central bank expects to raise rates three more times next year.
“The committee is determined take the necessary steps to restore price stability. Jerome Powell, Fed chair, stated that the U.S. economy was strong and well-positioned for tighter monetary policies during his press conference statements.
Federal Reserve: US Inflation remains Elevated
Peter Schiff, an economist and gold bug, tweeted about the Fed’s rate hike. Schiff stated that the only reason why the Fed raised rates was inflation. The Fed didn’t plan any rate increases in 2022 before admitting that inflation was not temporary. The Fed has no other options than to keep rates at zero, given current geopolitical risks as well as weakness in the economy or financial markets.
In fact, the U.S. central banking admitted that inflation remained high in post-meeting statements. The FOMC rate hike announcement explained that inflation remains high, reflecting supply-demand imbalances due to the pandemic, higher oil prices and wider price pressures.
The popular U.S. indexes, including the Dow Jones Industrial Average, NYSE and S&P 500, remained green following the FOMC rate increase announcement. After a short jump in the early trading hours on Wednesday (ET), crypto economy markets remained stable.
Following the FOMC statements, the crypto economy has risen 1.2% over the past 24 hours. The price for one ounce of.999 pure gold has fallen by 0.17% in the past 24 hours. One ounce of gold trades for $1,914 an ounce at press time. This is 7.08% lower than the asset’s most recent high of $2,060.
