Fed meeting

2022 - 3 - 16

Fed Raises Interest Rates for First Time Since 2018 (unknown)

Full coverage of the Federal Reserve's policy statement and 2.30 p.m. press conference. Mar 16, 2022 at 4:53 pm ET. Share.

–The Fed is looking to take some of the air out of the labor market. The labor market is tight “to an unhealthy level,” he said. That’s partly due to higher gasoline prices and scrambled supply chains—the fallout of Russia’s invasion of Ukraine.

Federal Reserve approves first interest rate hike in more than three ... (CNBC)

The Fed approved a 0.25 percentage point rate hike, the first increase since December 2018. Officials indicated an aggressive path ahead, with rate rises ...

The Fed in September 2020 approved a new approach to inflation, in which it would let it run hotter in the interest of a full and, most notably, inclusive employment goal that spans across race, gender and wealth. For instance, clothing prices, after plummeting in the early days of the pandemic, have risen 6.6% over the past year. Prices are up 7.9% year over year, according to the consumer price index, which measures a wide-ranging basket of goods and services. "The invasion of Ukraine by Russia is causing tremendous human and economic hardship," the statement said. But myriad factors have combined to force the Fed's hand on inflation, a condition that policymakers last year dismissed as "transitory" before capitulating. The committee still expects the unemployment rate to end this year at 3.5%. In its post-meeting statement, the FOMC said it also "anticipates that ongoing increases in the target range will be appropriate." Committee members bumped up their inflation estimates, expecting the personal consumption expenditures price index excluding food and energy to reflect 4.1% growth this year, compared with the 2.7% projection in December 2021. On GDP, December's 4% was sliced to 2.8%, as the committee particularly noted the potential implications of the Ukraine war. "The committee is determined to take the measures necessary to restore price stability. That is a full percentage point higher than indicated in December. The committee sees three more hikes in 2023 then none the following year. Fed officials indicated the rate increases will come with slower economic growth this year.

Federal Reserve Board and Federal Open Market Committee ... (Federal Reserve)

The attached tables and charts released on Wednesday summarize the economic projections made by Federal Open Market Committee participants in conjunction ...

Federal Reserve issues FOMC statement (Federal Reserve)

Indicators of economic activity and employment have continued to strengthen. Job gains have been strong in recent months, and the unemployment rate has ...

In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. 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. In addition, the Committee expects to begin reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities at a coming meeting. With appropriate firming in the stance of monetary policy, the Committee expects inflation to return to its 2 percent objective and the labor market to remain strong. The invasion of Ukraine by Russia is causing tremendous human and economic hardship. Job gains have been strong in recent months, and the unemployment rate has declined substantially.

Fed Raises Interest Rates and Projects Lingering Inflation: Live ... (The New York Times)

The Federal Reserve lifted its policy interest rate for the first time since 2018 and penciled in six more rate increases this year as it tries to combat a ...

“In addition, we expect to begin reducing the size of our balance sheet at a coming meeting.” Officials now expect to raise rates to 2.8 percent by the end of 2023, based on the median estimate, up from 1.6 percent in their previous projections. But as the central bank makes borrowing more expensive, demand for new cars and houses is likely to ease, alleviating some of the pressure on supply chains. The Federal Reserve raised its benchmark rate by a quarter percentage point as it tries to rein in inflation. The Fed is trying to get inflation down to a level where price increases do not influence people’s spending choices or daily lives. You might wonder why the Fed would want to slow down the economy and hurt the stock market. The Fed is acting at a tense moment for many consumers and investors. Markets are also carefully watching to see when the Fed will begin to shrink its nearly $9 trillion balance sheet of bond holdings, a policy move that could push up longer-term interest rates. The central bank does not want to stoke uncertainty at a geopolitically fraught moment, and Mr. Powell went out of his way to lay out its plans clearly. The Fed’s quarterly economic projections, released alongside the rate decision, showed that officials expected inflation to be 4.3 percent by the end of 2022. A surge in consumer spending has helped to push the rate of inflation to levels not seen since the 1980s. Policymakers projected six more similarly sized moves over the course of 2022 as inflation has reached a 40-year high, signaling that they are prepared to pull back support for the economy markedly.

Fed Hikes Rates 25 Basis Points at March 2022 Meeting (Investopedia)

The Federal Open Market Committee (FOMC) increased its target range for the fed funds rate by 25 basis points at its meeting on March 15-16, 2022.

The FOMC's statement was accompanied by an implementation note. The implications for the U.S. economy are highly uncertain, but in the near term the invasion and related events are likely to create additional upward pressure on inflation and weigh on economic activity." One was Russia's war on Ukraine. The statement said: "The invasion of Ukraine by Russia is causing tremendous human and economic hardship. The FOMC's press release stated: "Indicators of economic activity and employment have continued to strengthen. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures." The new target range is 25-50 bp.1

Federal Reserve Meeting: One Rate Hike Down, Six More Coming ... (Investor's Business Daily)

The Federal Reserve meeting saw the first rate hike since 2018. The Dow Jones regained its footing after the Fed policy news.

However, it was a pretty simple matter for the Fed to backpedal in early 2019 since inflation was tame. Eventually, the Fed signaled retreat in early 2019, as rate hikes turned to rate cuts and QT gave way to more bond purchases. In fact, the Fed went even further, insisting that inflation would have to exceed the target for some time before a rate hike. So today's quarter-point hike in the federal funds rate target range to 0.25%-0.5% has left the Fed historically behind the curve. If Deutsche Bank is right, the Fed could let $800 billion in assets run off its balance sheet this year. As long as it appears the Fed can get control of inflation without making policy overly tight, stocks may weather this storm. The policy statement indicated that Fed would begin to pare back asset holdings "at a coming meeting." In other words, the Fed will get control of inflation, even if there is an economic price to pay. While expressing optimism that the labor market will remain strong as the Fed tightens, he added, "but we have to restore price stability." The latter figure implies policy will go beyond what Fed members consider to be the long-term neutral rate of 2.5%. After the Fed meeting, the Dow Jones industrial average erased gains in afternoon stock market action, but found support and rallied strongly as Fed chief Jerome Powell answered questions. Policymakers revealed their expectation for a total of seven quarter-point rate hikes this year and at least three more in 2023.X

Federal Reserve announces interest rate hike (CBS News)

The quarter-point hike is the first rate increase since 2018 as the central bank looks to rein in inflation.

"One reason one might worry about a recession is that you think that monetary policy in bringing down inflation can cause that. Powell said they expect inflation to remain high through the middle of the year. For credit card holders, a first increase of 0.25% may be inconsequential but multiple rate hikes over the next year or so could add up. Before the invasion of Ukraine, the expectation was that inflation would peak at the end of the first quarter of this year and then starting to come down in the second half of the year, but Powell said they're seeing "a little bit of short-term upward pressure inflation" due to higher prices for oil and other commodities. The median projection over the following two years is 2.8%. But Powell said the projections do not represent a committee decision or plan. This is the first time the Fed has hiked the rate since the end of 2018. Personal consumption expenditures, the preferred measure used by the Federal Reserve, showed prices, excluding often-volatile food and energy, up 5.2% from a year ago. She noted record job creation and declines in unemployment. Auto loan rates are also expected to rise. He said they will look at the data coming in. "At the Federal Reserve we are strongly committed to achieving the monetary policy goals that Congress has given us: maximum employment and price stability. The move does not come as a surprise.

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