The Federal Reserve on Wednesday announced its final 2022 decision on interest rates and, unsurprisingly, they're going up again as the Fed and its Chair Jerome Powell seek to strangle the U.S. economy until inflation falls to a target of just two percent.
After multiple consecutive 75 basis point increases in 2022, the Fed increased rates 50 basis points following their last meeting of the year, moving the target rate to 4.50 percent, its highest level since October 2007.
⚠️BREAKING:
— Investing.com (@Investingcom) December 14, 2022
*FED HIKES INTEREST RATE BY 50BPS TO 4.50%, HIGHEST SINCE OCTOBER 2007
🇺🇸 🇺🇸 pic.twitter.com/hjCD7vpmNS
Noting that inflation — which the Biden administration tried to deny, then called a high-class problem, then claimed it was transitory, then blamed it on Russia and oil and gas companies — "remains elevated," the Fed pointed to "supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures" as reasons cost increases have not yet reversed.
"The Committee anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time," the Fed said in a statement announcing their latest rate hike. The central bank also raised its median forecast for 2023 to 5.1 percent, up from a previous projection of 4.6 percent.
BREAKING: The Federal Reserve raised its benchmark interest rate to the highest level in 15 years. @steveliesman reports. https://t.co/cOMIC5GlLj pic.twitter.com/igarPfhUtt
— CNBC (@CNBC) December 14, 2022
The Fed's decision comes after the latest Consumer Price Index report released this week showed that costs continued to rise in November for an annual advance of more than 7 percent, and one week after the Producer Price Index surged past Wall Street estimates as prices upstream from consumers continue to move higher.
News of another interest rate hike, plus the outlook stating that more increases would be necessary in 2023 sent stocks tumbling to session lows:
stocks did not like that fed decision: https://t.co/fB1BMxsLnj pic.twitter.com/Qnz8EZjnv5
— Hannah Miao (@hannahmiao_) December 14, 2022
During Chairman Powell's press conference following the rate hike, he noted that Wednesday's decision was another historically large increase while markets dropped even more precipitously with the Dow, S&P 500, and Nasdaq all losing more than one percent in the hour after the latest interest rate decision was announced.
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