On Wednesday, the US Federal Reserve raised interest rates by 25 basis points (25 bps) or 0.25 percent as widely expected and hinted that it might cause further increases. The Federal Open Market Committee (FOMC), chaired by Jerome Powell, Chair of the Federal Reserve of the United States, released a statement saying that the decision to raise the critical benchmark rates was “unanimous.”
The central bank, led by chair Jerome Powell, raised the target range for the federal funds rate to 5 to 5-1/4 percent. The FOMC said it is prepared to adjust the stance of monetary policy as appropriate if risks emerge. The Fed continues on its path of achieving maximum employment and an inflation rate of 2 percent.
“In determining the extent to which additional policy firming may be appropriate to return inflation to 2 percent over time, 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,” read the FOMC statement. “In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans. The Committee is strongly committed to returning inflation to its 2 percent objective.”
The FOMC further said that it would continue to monitor the implications of incoming information for the economic outlook when assessing the appropriate stance of monetary policy. “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 consider a wide range of information, including readings on labor market conditions, inflation pressures and expectations, and financial and international developments.”
