Fed approves 0.75-point hike to take rates to highest since 2008 and hints at change in policy ahead
Source: CNBC
The Federal Reserve on Wednesday approved a fourth consecutive three-quarter point interest rate increase and signaled a potential change in how it will approach monetary policy to bring down inflation.
In a well-telegraphed move that markets had been expecting for weeks, the central bank raised its short-term borrowing rate by 0.75 percentage point to a target range of 3.75%-4%, the highest level since January 2008. The move continued the most aggressive pace of monetary policy tightening since the early 1980s, the last time inflation ran this high.
Along with anticipating the rate hike, markets also had been looking for language indicating that this could be the last 0.75-point, or 75 basis point, move. The new statement hinted at that policy change, by saying the Fed 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.
Economists are hoping this is the much-talked about step-down in policy that could see a rate increase of half a point at the December meeting and then a few smaller hikes in 2023. This weeks statement expanded on previous language simply declaring that ongoing increases in the target range will be appropriate. The new language read: 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.
Read more: https://www.cnbc.com/2022/11/02/fed-hikes-by-another-three-quarters-of-a-point-taking-rates-to-the-highest-level-since-january-2008.html
Article updated.
Original article -
In a well-telegraphed move that markets had been expecting for weeks, the central bank raised its short-term borrowing rate by 0.75 percentage point to a target range of 3.75%-4%, the highest level since January 2008. The move continued the most aggressive pace of monetary policy tightening since the early 1980s, the last time inflation ran this high.
Along with anticipating the rate hike, markets also had been looking for language indicating that this could be the last 0.75-point, or 75 basis point, move. Specifically, some Fed officials along with Wall Street economists and strategists in recent weeks had talked of a step-down in policy that could see a rate increase of half a point at the December meeting and then a few smaller hikes in 2023.
That language was not overt in the post-meeting statement from the rate-setting Federal Open Market Committee, though there was a tweak that could point to an adjustment in policy. This weeks statement expanded on previous language simply declaring that ongoing increases in the target range will be appropriate.
elleng
(131,106 posts)Just keep refusing to 'regulate' for greed, folks.
Fiendish Thingy
(15,656 posts)PatrickforB
(14,587 posts)will cause layoffs. The extra bump in labor supply will cause wages to be driven back down.
That is the strategy.
But the Fed has no objection to corporate price gouging.
Because, hey, shareholder PROFITS!
IronLionZion
(45,528 posts)Quantitative tightening is still very slow.
FredGarvin
(485 posts)Oil just shot up 2%.
IronLionZion
(45,528 posts)I want the Fed to reduce the money supply
FredGarvin
(485 posts)Inflation be damned.
This could get ugly for consumers
Fiendish Thingy
(15,656 posts)Powell is talking about the possibility of smaller hikes in coming months, not easing rates as in lowering them.
FredGarvin
(485 posts)Lonestarblue
(10,064 posts)while few corporate heads suffered at all. The FED has caused 8 of the last 9 recessions. Lets hope the next one on the horizon is not as bad as 2008 and doesnt last years.
IronLionZion
(45,528 posts)Save whatever you can.
bluestarone
(17,030 posts)Why announce now? Timing sucks. Could change peoples votes. (that's what i'm thinking)
GregariousGroundhog
(7,526 posts)This is the fourth straight 0.75% rate increase, and the markets are predicting another 0.5% increase at the next meeting in mid-December.
Bengus81
(6,932 posts)Get freakin real,these endless rate hikes do NOTHING for the real inflation costs which are fuel and food. Bet those good ole' boys in the FED have their billionaire banker buddies doing another high five with them.