With the highest interest rate in 15 years, the Federal Reserve continued its fight against inflation.
Overnight borrowing rates were raised half a percentage point by the Federal Open Market Committee, bringing them to 4.25%-4%.
Having raised rates through next year, officials are indicating that they will not lower them until 2024.
Although recent signs indicate inflation may have peaked, the Federal Reserve raised its benchmark interest rate on Wednesday to its highest level in 15 years.
As expected, the Federal Open Market Committee boosted the overnight borrowinga percentage point, taking it to a range between 4.25% and 4.5%. Following four straight three-quarter point hikes, the most aggressive policy move since the early 1980s, the increase broke a string of four straight three-quarter point increases.
In addition to the rate increase, officials indicated they would not reduce rates until 2024. On the “dot plot” of individual members’ expectations, the FOMC estimated that interest rates would reach 5.1% at the end of the rate hike cycle.
Rates are likely to stay higher for longer, which has adversely affected investors, and stocks have given up their gains so far this year. To prevent the expectation of higher prices from becoming entrenched, Chairman Jerome Powell stressed the importance of keeping up the fight against inflation.
The chair said at a news conference following the meeting that inflation data so far for October and November show a welcome slowdown. To be confident that inflation is heading downward, however, we will need substantially more evidence.
Source and Original Article: CNBC