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    US Fed raises interest rates by 75 basis points, biggest hike in 28 years

    FOMC stresses it is strongly committed to returning inflation to its 2% objective - Anadolu Agency

    WORLD, ECONOMY

    US Fed raises interest rates by 75 basis points, biggest hike in 28 years

    FOMC stresses it is strongly committed to returning inflation to its 2% objective

    Ovunc Kutlu   | 15.06.2022

    ANKARAThe US Federal Reserve on Wednesday raised its benchmark interest rate by 75 basis points, marking its biggest rate hike in 28 years.

    The Federal Open Market Committee (FOMC) said in a statement that it decided to raise the target range for the federal funds rate to 1.5%-1.75% range.

    The largest interest rate increase since 1994 was approved by all FOMC members, except for Kansas City Fed President Esther George who voted for a 50 basis point of rate hike.

    The FOMC added that it anticipates "ongoing increases in the target range will be appropriate."

    "The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals," it said.

    "The Committee’s assessments will take into account a wide range of information, including readings on public health, labor market conditions, inflation pressures and inflation expectations, and financial and international developments," it added.

    The FOMC stressed that it is strongly committed to returning inflation to its 2% objective.

    The US annual consumer inflation climbed to 8.6% in May, the highest level in more than 40 years.

    Fed Chair Jerome Powell later said the central bank understands the hardship caused by inflation, adding: "We are strongly committed to bring inflation down and moving expeditiously to do so."

    "The labor market is extremely tight and inflation is much too high," he told at a post-meeting press conference. "The tightening conditions seen in recent months should continue to tamper growth, and help bring demand into better balance with supply."

    Powell said the pace of the rate hikes will depend on the incoming macroeconomic data and the ongoing outlook of the economy.

    "Clearly, today's 75 basis points of increase is an unusually large one, and I do not expect moves of this size to be common. From the perspective of today, either a 50 basis point or a 75 basis point increase seems most likely at our next meeting."

    Powell underlined that the FOMC will make its interest rate decisions meeting by meeting.

    "Economy often evolves in unexpected ways. Inflation is obviously surprised to the upside over the past year, and further surprises could be in store. We need to be nimble ... We are highly attentive to inflation risks and determined to take the measures necessary to restore price stability," he explained.

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    स्रोत : www.aa.com.tr

    Full recap of the Fed’s rate hike and Powell’s comments on the outlook for future increases

    The central bank issued a 0.75 percentage point rate hike on Wednesday — the third consecutive increase of that magnitude.

    UPDATED WED, SEP 21 20223:48 PM EDT

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    Full recap of the Fed’s rate hike and Powell’s comments on the outlook for future increases

    Darla Mercado, CFP®

    The Federal Reserve announced that it will raise its benchmark rate by three-quarters of a percentage point on Wednesday afternoon in its latest attempt to quash inflation. Chair Jerome Powell gave an update update on the central bank’s economic outlook and forecast for future rate hikes.

    17 HOURS AGO

    Powell says Fed will ‘plan for the worst’ on shelter inflation

    Fed Chair Jerome Powell said that the central bank will not count on the lagged impacts of shelter costs in inflation metrics when determining its policy moves.

    “I think that shelter inflation is going to remain high for some time. We’re looking for it to come down, but it’s not exactly clear when that will happen. It may take some time. Hope for the best, plan for the worst,” Powell said.

    WATCH NOW VIDEO01:46

    Housing affordability requires a realignment of supply and demand, says Fed Chair Powell

    Shelter costs, especially rent, has become a key source of inflation in recent months and oil and other commodity prices come down. Because of how the metric is calculated, rising rents show up with a lag in the official inflation data.

    — Jesse Pound 17 HOURS AGO

    Once inflation starts to go down, people will begin feeling better, says Fed Chair Powell

    WATCH NOW VIDEO02:46

    Once inflation starts to go down, people will begin feeling better, says Fed Chair Powell

    17 HOURS AGO

    ’75 is the new 25,′ says Bill Zox of Brandywine Global

    As the Federal Reserve vows to continue raising interest rates to tamp down on inflation, investors should brace for additional hikes of 75 basis points in the future, said Bill Zox, portfolio manager at Brandywine Global.

    Projections from the central bank’s meeting indicated participants expect to increase rates by at least 1.25 percentage points in the two remaining meetings this year.

    “I believe 75 is the new 25 until something breaks, and nothing has broken yet,” Zox said. “The Fed is not anywhere close to a pause or a pivot. They are laser-focused on breaking inflation. A key question is what else might they break.”

    — Michelle Fox 17 HOURS AGO

    Powell says inflation has ‘not really’ come down, despite some supply side healing

    Fed Chair Jerome Powell said the inflation level hasn’t fallen as much as the central bank had expected it would by this point, in the press conference Wednesday following the two-day policy meeting.

    “Our expectation has been we would begin to see inflation come down, largely because of supply side healing,” he said. “We haven’t. We have seen some supply side healing but inflation has not really come down.”

    WATCH NOW VIDEO01:59

    We need to put meaningful downward pressure on inflation, says Fed Chair Jerome Powell

    He said that core PCE inflation, “on a 3- 6- and 12-month trailing annualized basis,” is now at 4.8%, 4.5%, and 4.8%, respectively.

    “That’s a pretty good summary of where we are with inflation and that’s not where we wanted to be,” Powell said. “We need to continue, and we did today do another large increase as we approach the level we think we need to get to. We’re still discovering what that level is.”

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    Stocks recover as Fed tees up more rate hikes to tame inflation

    Stocks rose as Federal Reserve Chair Jerome Powell pledged to boost rates to slow down inflation.

    The central bank hiked interest rates by 75 basis points for a third consecutive time. The major averages initially slipped, but they recovered during Powell’s question-and-answer session as he reiterated his tough stance on fighting inflation.

    The Dow Jones Industrial Average leapt more than 100 points. The Nasdaq gained 0.9%, and the S&P 500 added 0.6% around 3:04 p.m. ET.

    ­-Darla Mercado 18 HOURS AGO

    No one knows if Fed hikes will mean recession, Powell says

    The Federal Reserve has always understood that it may be difficult to manage a soft landing while raising interest rates enough to tame high inflation.

    “No one knows whether this process will lead to a recession or if so how significant that recession would be,” Chair Jerome Powell said Wednesday. “That’s going to depend on how quickly wage and price inflation pressures come down, whether expectations remain anchored and also if we get more labor supply.”

    He added that the chances of a soft landing will diminish if policy needs to get more restrictive for the Fed to reach its goal of 2% inflation. However, high inflation would inflict greater pain long term, he said.

    —Carmen Reinicke 18 HOURS AGO

    Speed of rate hikes adds risks, CFRA’s Stovall says

    स्रोत : www.cnbc.com

    Powell sees pain ahead as Fed sticks to the fast lane to beat inflation

    Americans are headed for a painful period of slow economic growth and possibly rising joblessness as the Federal Reserve raises interest rates to fight high inflation, U.S. central bank chief Jerome Powell warned on Friday in his bluntest language yet about what is in store for the world's biggest economy.

    August 26, 20227:14 PM UTC

    Last Updated a month ago

    Powell sees pain ahead as Fed sticks to the fast lane to beat inflation

    By Howard Schneider and Ann Saphir

    6 minute read

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    JACKSON HOLE, Wyo., Aug 26 (Reuters) - Americans are headed for a painful period of slow economic growth and possibly rising joblessness as the Federal Reserve raises interest rates to fight high inflation, U.S. central bank chief Jerome Powell warned on Friday in his bluntest language yet about what is in store for the world's biggest economy.

    In a speech kicking off the Jackson Hole central banking conference in Wyoming, Powell said the Fed will raise rates as high as needed to restrict growth, and would keep them there "for some time" to bring down inflation that is running at more than three times the Fed's 2% goal.

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    "Reducing inflation is likely to require a sustained period of below-trend growth," Powell said. "While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses. These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain."

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    As that pain increases, Powell said, people should not expect the Fed to dial back its monetary policy quickly until the inflation problem is fixed.

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    "I thought the message was strong and right," Cleveland Fed President Loretta Mester said in an interview with Bloomberg TV after the speech. "I think we're going to have to move (short-term interest rates) up ... above 4% and probably need to hold them there next year."

    Indeed, Powell's remarks summed up the momentous challenge facing not just Fed policymakers but also most of the other dozens of central bankers from abroad at Jackson Hole who are frantically trying to contain the worst outbreak of inflation in four decades or more.

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    Some investors anticipate the Fed will flinch if unemployment rises too fast, with some even penciling in interest rate cuts next year.

    To the contrary, Powell and other policymakers are signaling that even a recession would not budge them if inflation is not convincingly heading back to the Fed's target. Powell gave no indication on Friday of how high rates might rise before the Fed is finished, only that they will go as high as needed.

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    "The historical record cautions strongly against prematurely loosening policy," Powell said. "We must keep at it until the job is done. History shows that the employment costs of bringing down inflation are likely to increase with delay."

    Underscoring the same "raise-and-hold" message on interest rates, Atlanta Fed President Raphael Bostic told Bloomberg TV that once the central bank's policy rate is 100 to 125 basis points higher than the current 2.25%-2.50% range, "we should stay there for a long time."

    Reuters Graphics Reuters Graphics

    After Powell's remarks, interest rate futures traders beefed up bets on a third straight 75-basis-point rate hike at the Fed's Sept. 20-21 policy meeting and priced in expectations the policy rate will get to the 3.75%-4.00% range by next March.

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    Powell's frank acknowledgment of coming pain to households "took investors by surprise and hammers home how serious they are about raising rates to fight inflation," said Ryan Detrick, chief market strategist at Carson Group. "The hope of a dovish pivot was squashed, at least for now."

    But rate futures trading continued to reflect expectations for such a pivot later next year, with the Fed seen cutting its policy rate by about 40 basis points by the end of 2023 and further in 2024.

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    The Fed will get another chance to reset those expectations in September, when its 19 policymakers release a fresh set of economic forecasts, including for their own rate hikes.

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    Federal Reserve Chair Jerome Powell walks with Fed Vice Chair Lael Brainard and New York Fed President John Williams during a break at the annual Kansas City Fed Economic Policy Symposium in Jackson Hole, Wyoming, U.S., August 26, 2022. REUTERS/Ann Saphir

    Powell did not hint at whether the Fed would stick with a 75-basis-point hike or downshift to a half-percentage-point move at its policy meeting next month, except to say the decision would depend on the "totality" of the data by that time.

    स्रोत : www.reuters.com

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