The Fed Raise Interest Rates 25 Basis Points

The US Federal Reserve, aka The Fed, raised its benchmark interest rate by 25 basis points at the Open Market Committee (FOMC) Meeting on February 1, 2023. This decision raised the Fed's benchmark interest rate to a range of 4.5 - 4.75 percent. This means the Fed is slowing the pace of increases after previously raising 50 basis points in December and 75 basis points in the previous four meetings. 

The unanimous decision by the FOMC was in line with financial market expectations. Also Read: Stock market outlook if the Fed hikes interest rates again Fed Governor Jerome Powell said “for some time” and that officials would need “substantially more evidence” to be confident that inflation was on track to decline to the Fed’s 2% target. 

“The committee anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2% over time," the Fed said in a statement. In a sign that the end of the hike cycle may be in sight, the committee said the rate of future rate hikes would depend on a number of factors including the cumulative tightening of monetary policy. 

It previously ties future rates of increase to those factors. Also Read: FOMC Meeting Ends Today, The Fed Is Projected to Raise Interest Rates by 25 Bps The Fed also noted that inflation has subsided but remains high, indicating policy makers are increasingly convinced that price pressures have reached their peak. At their December meeting, Fed officials projected that they would hold interest rates on hold once they reached 5 percent, but market participants expect that they will begin to stop raising rates slightly below that level. US central bank governors have said the stable October, November and December inflation data were welcome news, but they need to wait for more data.

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