introduced a jumbo rate hike, raising the Federal Funds Rate (FFR) by 75 basis points (bps) on November 2, 2022. The U.S. central bank said on Wednesday that the rate hikes were aimed at curbing inflation, and the Fed said “recent data points to modest growth in spending and output.”
The US Central Bank will raise the Federal Funds Rate by 75bps
While US President Joe Biden hosts an event called the “Infrastructure Talent Pipeline Challenge,” the country’s The central bank raised its FFR once again on Wednesday, up 75bps. Markets were pricing in and predicting his 75bps gain long before the Federal Open Market Committee (FOMC) convened.
Shortly before the rate hike, the White House reportedthat the Biden administration will allocate his $13.5 billion to help heat low-income households this winter. Did. This is due to the fact that blazing inflation has caused US consumers to pay 28% more to heat their homes than they did last winter.
“Recent indicators point to modest growth in spending and output,” he said Wednesday in the FOMC announcement. “Employment has grown strongly in recent months and the unemployment rate remains low. continue to rise,” the central bank added.
The Fed’s FOMC statement continued:
Russia’s war against Ukraine is causing enormous human and economic hardship. War and related events are creating further upward pressure on inflation, weighing heavily on global economic activity. The Commission pays great attention to inflation risks.
The Fed rate hike follows a report on the US Central Bank’s main inflation indicator, the Personal Consumption Expenditures (PCE) Price Index, which rose 0.5% in September. Moreover, US consumer prices rose 8.2% in September, according to the latest Consumer Price Index (CPI) report.
Stocks, Bitcoin and precious metals rise on possible Fed pivot
Fed announces 75bps hike, Bitcoin (BTC) also rose 1% in the last hour after the announcement. The price of gold per troy ounce rose0.98%, while the price of 1 ounce of pure silver rose 1.58% in the $20 an ounce region.
Markets rallied as the Fed’s announcement hinted at a possible turnaround. “The committee will take into account the cumulative tightening of monetary policy, the lag that monetary policy has on economic activity and inflation, and economic and financial development,” the central bank said.
Freddie Mac reported last week that the average interest rate on a 30-year fixed mortgage has risen above 7%, compared with just 3.14% a year ago. A rise in the FFR could trickle down into mortgage, credit, and lending rates, impacting all Americans seeking access to these financial instruments.
In Jerome Powell’s follow-up speech,he still needed and still needs rate hikes and monetary tightening to deal with the country’s rampant inflation. Chairman Powell has repeatedly said that the 2% inflation rate that the Federal Reserve is currently aiming for remains a strong target.
Nonetheless, reporters told the central bank governor that the Fed
After Chairman Powell’s press conference, stocks, precious metals and Bitcoin began to lose the gains he saw an hour after the FOMC statement was released. By 2:55pm (ET), all four major stock indices were down, with gold up 0.13% andBTCup 0.6% on Wednesday afternoon.
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