FOMC raises the target for Fed funds rate by 25bp to 1.75-2.00%
|Following its 2-day meeting, the Federal Open Market Committee announced that it would hike the benchmark interest rate by 25 basis points to the target range of 1.75% - 2% in a widely expected decision. Jerome Powell, Chair of the Board of Governors of the Federal Reserve System, is scheduled to deliver his comments on the monetary policy in a press conference at 18:30 GMT.
Key highlights from the official statement (via Reuters)
- Fed drops reference from previous statements that it expected rates to be below neutral rate for 'some time'.
- Fed says economic activity rising at a solid rate, previously described growth as moderate.
- Fed repeats that stance of monetary policy remains accommodative.
- Fed says further gradual rate increases will be consistent with sustained economic growth, strong labor market and inflation near 2 percent over medium term.
- Fed says indicators of longer-run inflation expectations are little changed; drops previous references to market and survey-based measures of inflation outlook.
- Fed says household spending growth has picked up.
- Fed repeats near-term risks to the economy appear "Roughly balanced".
- Fed vote in favor of policy was unanimous.
- Fed says raises interest on excess reserves rate to 1.95 pct from 1.75 pct.
- Fed says setting ioer rate 5 basis points below top of target range for funds rate aims to keep market rates well within range.
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About the FOMC statement
Following the Fed's rate decision, the FOMC releases its statement regarding monetary policy. The statement may influence the volatility of USD and determine a short-term positive or negative trend. A hawkish view is considered as positive, or bullish for the USD, whereas a dovish view is considered as negative, or bearish.
About FOMC economic projections
This report, released by Federal Reserve, includes the FOMC's projection for inflation and economic growth over the next 2 years and, more importantly, a breakdown of individual FOMC member's interest rate forecasts.
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