In the latest Federal Open Market Committee (FOMC) report, it was stated that the U.S. economy has been experiencing moderate growth and members of the committee have decided to raise the federal funds rate by 25 basis points (bps) in order to keep a handle on inflation.
Fed Raises Benchmark Bank Rate by 25bps
The U.S. Federal Reserve once again hiked the federal funds rate by 25bps after pausing the month prior. It was widely accepted that a 25bps rise was in the cards as CME’s Fedwatch tool said the probability was 99%. In the statement on Wednesday, the FOMC said that the U.S. banking system was sound and resilient.
Nevertheless, it expressed concern that tighter credit conditions for households and businesses might have a negative impact on economic activity, hiring, and inflation. The extent of these effects remains uncertain, and the committee remains attentive to inflation risks. Per usual, the Fed still is focused on obtaining a 2% annual inflation rate over the longer term.
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