Jerome Powell Hikes Rates 50 Basis Points, Signals More Hawkish Tightening

As widely expected, central bank officials raised borrowing costs another 50 basis points, bringing the Federal Reserve’s target range between 4.25% and 4.5%, whilst signalling more, and higher, rate hikes are imminent.

Since last month’s hawkish FOMC meeting, markets anticipated a more relaxed monetary stance from the Federal Reserve, one that would bring no more than a half-percentage point rate increase followed by even a potential pause. However, Wednesday afternoon proved a little different. Although Fed Chair Jerome Powell delivered a modest 50 basis-point increase, “the Committee anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary
policy that is sufficiently restrictive to return inflation to 2 percent over time.”

In other words, more rate hikes are being stuffed down the economy’s proverbial windpipe, for a longer period of time. Whilst solely blaming Russia’s war in Ukraine as the culprit behind the upward pressure on inflation rather than the Fed’s own unprecedented money-printing spree, officials said they will be taking incoming economic data into account when it comes to future pace of increases, notably lags in monetary policy tightening and any new financial and economic developments.

“The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals,” the Fed’s statement read. “The Committee’s assessments will take
into account a wide range of information, including readings on public health, labor market conditions, inflation pressures and inflation expectations, and financial and international developments.”

Information for this briefing was found via the Federal Reserve and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.