Skip to main content

Federal Reserve Hikes Rate by 50bps, FOMC Signals Rate to Rise to 5.1% Next Year

Federal Reserve Hikes Rate by 50bps, FOMC Signals Rate to Rise to 5.1% Next Year

The U.S. central bank’s Federal Open Market Committee (FOMC) convened on Wednesday and raised the federal funds rate by 50 basis points (bps). The 0.5 percentage point rise follows the four consecutive three-quarters of a point increases codified during the last few months. The FOMC’s rate hike follows the recent U.S. inflation report which indicated that consumer prices fell to 7.1%, which was lower than expectations.

Fed Raises Federal Funds Rate by 50bps, Central Bank Expects More Increases Going Forward

Following the consumer price index (CPI) report published on Tuesday, members of the U.S. Federal Reserve met on Wednesday and announced a 50bps rate hike. The December increase is smaller than the last four three-quarters of a point (75bps) rate increases.

“The committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run,” the FOMC said. “In support of these goals, the committee decided to raise the target range for the federal funds rate to 4-1/4 to 4-1/2 percent.” The Fed is projecting an additional 75bps hike in the federal funds rate by the end of next year.

The news follows Tuesday’s CPI data that rose less than expected as metrics show the inflation rate in November was up 7.1% from a year ago. Core CPI jumped 0.2% on the month, the U.S. Bureau of Labor Statistics (BLS) noted. “Over the last 12 months, the all items index increased 7.1 percent before seasonal adjustment,” the BLS CPI report details. The FOMC report notes that the Fed will continue to monitor “incoming information for the economic outlook.”

“​​In addition, the committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in the Plans for Reducing the Size of the Federal Reserve’s Balance Sheet that were issued in May,” the FOMC members disclosed. “The committee is strongly committed to returning inflation to its 2 percent objective,” the FOMC added. After the rate hike and the bank signaled more increases will be enacted, equity markets and precious metal prices tumbled.

Crypto prices dropped too, and the price of bitcoin (BTC) fell beneath the $18K zone after the FOMC statement. The Fed has codified a number of rate hikes this year with one half percentage point jump and four three-quarters of a point hikes, making it a grand total of five federal funds rate increases in 2022.

At the end of November, Federal Reserve chairman Jerome Powell hinted during a speech at the Brookings Institution in Washington that easing up on the rate hikes very well could happen in December. Powell has faced political pressure in regard to the rate hikes and Tesla’s Elon Musk has warned against the aggressive hikes in recent times.

“We have more work to do,” Powell told reporters on Wednesday afternoon, and he further noted that “inflation risks are to the upside.”

What do you think about the Federal Reserve’s rate hike on Wednesday? Let us know what you think about this subject in the comments section below.



from Bitcoin News https://ift.tt/aiu2HJR
Labels:

Comments

Post a Comment

Popular posts from this blog

Mt Gox Creditors Updated, Trustee Says Rehabilitation Custodian Is ‘Currently Preparing to Make Repayments’

On August 31, 2022, the Mt Gox trustee Nobuaki Kobayashi explained in a recent letter that the rehabilitation custodian is “currently preparing to make repayments” to Mt Gox creditors. Trustee Updates Mt Gox Creditors — Repayment Date and Exchange Still Unknown Last week speculation and rumors concerning the release of 140K bitcoin ( BTC ) from Mt Gox littered social media platforms and headlines. Bitcoin.com News covered the situation six days ago as a number of people and Mt Gox creditors called the rumors “ fake news .” During that same period of time, a bitcoin whale transferred 10,000 BTC to unknown wallets, and a 2018 annotation , heuristics, and clustering methods show the funds likely originated from the June 2011 Mt Gox hacks. Following the mysterious whale transfer, last Wednesday, Mt Gox published an official update from the court trustee Nobuaki Kobayashi that explains the court is “currently preparing to make repayments” to creditors. Mt Gox creditors have been wait...
Post a Comment
Read more

Fidelity Discusses Bitcoin as Portfolio Insurance — Could Soon Stand in ‘Stark Contrast’ to Path Fiat Currencies Take

Fidelity Digital Assets, a subsidiary of Fidelity Investments, says that bitcoin could be considered portfolio insurance. The firm notes that the cryptocurrency “may soon stand in stark contrast to the path that the rest of the world and fiat currencies may take — namely the path of increased supply, additional currency creation, and central bank balance sheet expansion.” Fidelity Says Bitcoin Could Be Portfolio Insurance Fidelity Digital Assets, a subsidiary of Fidelity Investments, recently published a research study titled “The Rising Dollar and Bitcoin.” The research outlines “how bitcoin could be considered portfolio insurance” as the rising dollar impacts global currency markets. “The strengthening U.S. dollar is wreaking havoc among other countries and may put pressure on the Federal Reserve to soon reverse its tightening monetary actions, something that has precedent based on 1985’s Plaza Accord,” Fidelity explained. In addition, “more monetary debasement may be needed to ...
Post a Comment
Read more

Economists Discuss Russia, China Potentially Developing Gold-Backed Currency That Could Undermine US Dollar

Economists have weighed in on reports that China and Russia may be developing a new gold-backed currency that could undermine the U.S. dollar’s status as the world’s primary reserve currency. Russia and China May Be Developing Gold-Backed Currency Several experts have shared their views on Russia and China potentially creating a new gold-baked currency, Fox Business reported Saturday, emphasizing that China has been buying up huge quantities of gold while Russia was forced off the U.S. dollar due to sanctions imposed on the country following its invasion of Ukraine. The news outlet noted that some experts have cautioned that these moves, along with the closer relationship that has developed between Moscow and Beijing, point to the likelihood of China attempting to launch a gold-backed currency. However, neither Russia nor China has officially confirmed plans for such a currency. Craig Singleton, senior fellow at the Foundation for Defense of Democracies and a former U.S. diplomat,...
Post a Comment
Read more