Fed Enacts Fourth Consecutive 75-bp Rate Hike, Signals Slower Pace on Future Hikes
The Federal Reserve on Wednesday enacted a fourth consecutive increase of 75 basis points in the federal funds rate, bringing it to a target range of 3.75% to 4%. The widely expected move brings the rate to its highest level since January 2008.
In a statement accompanying the decision, the Fed’s Federal Open Market Committee said it 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% over time.”
In determining the pace of future increases in the target range, the FOMC will consider “the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.” The committee will also continue reducing its holdings of Treasury securities and agency debt and agency MBS.
The Fed signaled that it plans to begin gradually tapering the increases until it reaches a target range of 5% next spring. CNBC reported that stocks rose after Wednesday’s announcement.
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