The US Federal Reserve (Fed) announced the interest rate decision that the whole world was locked in. In line with the expectations, the FOMC increased the policy rate by 25 basis points and pulled the interest rate to the range of 4.75-5.00 percent. Thus, while the Fed increased interest rates for the 9th time in a row, it raised the interest rate to the highest level in 16 years. It was wondered what action the Fed would take after the banking crisis.
Fed Chairman Powell’s messages on the banking crisis and monetary policy will be watched at 21.30 Turkish time (TSI).
PIGEON MESSAGE FROM FOMC
The statement after the meeting is as follows:
“Recent indicators point to modest growth in spending and output. Employment gains have increased in recent months and are advancing at a solid pace; unemployment remains low. Inflation remains high.
The US banking system is robust and resilient. Recent developments are likely to result in tighter credit conditions for households and businesses and put pressure on economic activity, hiring and inflation. The extent of these effects is uncertain. The Committee continues to be extremely attentive to inflation risks.
The committee aims to achieve maximum employment and inflation of 2 percent in the long term. To support these goals, the Committee decided to increase the target range for the federal funds rate to 4-3/4 percent to 5 percent. The Committee will closely monitor the incoming information and evaluate its impact on monetary policy. The Committee estimates that some further policy tightening may be appropriate to achieve a sufficiently restrictive monetary policy stance to return inflation to 2 percent over time. The Committee will take into account the cumulative tightening in monetary policy, delays in monetary policy’s impact on economic activity and inflation, and economic and financial developments while determining the extent of further increases in the target range. In addition, the Committee will continue to reduce its holdings in Treasury securities and corporate debt and corporate mortgage-backed securities, as outlined in its previously announced plans. The Committee is committed to returning inflation to its 2 percent target.
While evaluating the appropriate stance of the monetary policy, the Committee will continue to monitor the reflections of the incoming information on the economic outlook. Should risks arise that may prevent the Committee’s objectives from being achieved, the Committee will be prepared to adjust the monetary policy stance accordingly. The Committee’s assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.”