The Federal Reserve (Fed) ended its November interest rate decision meeting on Wednesday (2nd) and raised the benchmark interest rate by another 3 yards as expected, raising the benchmark interest rate corridor to a range of 3.75% to 4%, raising interest rates to the highest since January 2008. , while suggesting it may change monetary policy to reduce inflation.
The outside world is concerned regarding the Fed’s signal on the rate hike in December. The latest statement released by the Federal Open Market Committee (FOMC), although not explicit, hints that it may change monetary policy.
The latest statement mentions that the Committee expects that continued increases in the target range will be appropriate to achieve a sufficiently restrictive stance of monetary policy to bring inflation back to 2% over time.
The statement added: “In determining the pace of rate hikes in the future target range, the Committee will take into account the cumulative tightening of monetary policy, its impact on economic activity and lagging inflation, and economic and financial developments.”
According to market interpretation, this is a signal that the Fed will consider the extent of future interest rate hikes and that it will take some time for interest rate hikes to have an impact on the economy.
Stocks and bonds jumped on news of the Fed’s resurgent hopes. After the announcement of interest rates,Dow JonesOn Wednesday followingnoon, it flew high, rising more than 280 points.10-Year U.S. Treasury YieldThe decline extended to 3.995% from 4.042% previously.US dollar indexOn hearing the news, it fell more than 0.6%.
“The FOMC understands the lag in the impact of monetary policy on the economy, and committee members are willing to slow the pace of rate hikes as higher rates enter the financial system,” said Brent Ciliano, chief investment officer at First Citizens Bank Wealth Management.
“But markets are likely to remain volatile as investors grapple with slowing global growth, rising inflation and interest rates,” Ciliano added.