The Federal Reserve raised interest rates by three-quarters of a percentage point again on Wednesday and said its battle against inflation will require borrowing costs to rise further, yet signaled it may be nearing an inflection point in what +
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Fed Chair Jerome Powell, speaking in a news conference after the end of the central bank’s latest policy meeting, said he wanted no confusion on that point: Even if policymakers do scale back future increases, he said, they were still undecided about just how high rates would need to rise to curb inflation, and were determined to “stay the course until the job’s done.”
Major U.S. stock indices spiked after the release of the Fed’s statement, which promised to take economic risks more clearly into account in deciding the size of any further rate increases, but erased those gains as Powell spoke and ended the day sharply lower. The S&P 500 index fell 2.5% and the Nasdaq Composite slid more than 3%.
The document “implied that may be aiming for a higher medium-term level for the fed funds rate than currently expected,” Nelson said.Investors were expecting a signal the Fed might ease up on its pace of tightening after a blistering run that raised the policy rate from near zero in March to what is now a range of between 3.75% and 4.00% – the fastest monetary tightening since the early 1980s.
“Ongoing increases in the target range will be appropriate,” the central bank’s policy-setting Federal Open Market Committee said at the end of its two-day meeting. But “in determining the pace of future increases in the target range, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.
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