Benchmark Interest Raised by 75bps
The biggest increase since 1994
Fighting inflation that has been running wild, the Fed yesterday launched its biggest move against it by raising benchmark interest rates 75bps. This is the most aggressive hike since 1994.
The rate was set and took into consideration the level of its benchmark funds rate to a range of 1.5% to 1.75%, which is also another high. Stocks were very volatile after the decision but ended higher as Jerome Powell gave some wise words not concerning the money machine.
“Clearly, today’s 75 basis point increase is an unusually large one, and I do not expect moves of this size to be common. We want to see progress. Inflation can’t go down until it flattens out. If we don’t see progress ... that could cause us to react. Soon enough, we will be seeing some progress.”
Jerome Powell said as he expects another increase of the same figure to come during the July meeting.
Members of the FOMC indicated a more thorough and stronger path of rate increases as they still move to ease inflation. The Fed’s increase will end the year at 3.4% which compares with an upward revision of 1.5% from the March estimates.
The committee in charge sees rates rising to 3.8% in 2023, a full percentage point above those same exact estimates from March.