The Federal Reserve raised interest rates for the first time in three years and three months at the FOMC in March [New York = E-Daily Correspondent Kim Jong-nam] The US Federal Reserve raised the key interest rate for the first time in three years and three months. It is the end of the money loosening that has continued since Corona 19 and returning to austerity. The Fed hinted at a further 6 hikes, heralding a steep tightening of the money line.
Federal Reserve Chairman Jerome Powell speaks during a press conference following the March Federal Open Market Committees regular meeting held on the 15th and 16th of March.
The Fed announced at its regular meeting of the Federal Open Market Committee held on the 15th and 16th that it would raise the benchmark interest rate by 0.25 percentage points to 0.25 to 0.50%.
It is the first time in three years and three months since December 2018 that the Fed has raised the benchmark interest rate. This is the first adjustment since the base rate was lowered to zero in 2020 due to the COVID-19 pandemic. The increase was decided unanimously. However, “hard hawk” James Bullard, president of the Federal Reserve Bank of St.
The Fed is expected to continue tightening its policy throughout the year, starting with this hike. According to the economic outlook and dot chart released by the Federal Reserve, five out of 16 FOMC members predicted a seven-time rate hike this year. is the highest proportion. Assuming that it is raised by 0.25 percentage points, this is the speed at which it can raise at each of the remaining six FOMC meetings this year. The possibility of a “big step” of raising 0.50 percentage points at a time is not small.
In addition, there were 5 members each who raised the 9th and 6th raises this year. One committee member suggested that the rate should be raised to 3.00-3.25% this year.
At the time of the meeting in December of last year, the inside of the FOMC was inclined to raise three times this year, but it has increased dramatically in just three months.
The reason for this tightening is higher-than-expected inflation. In its economic outlook, the Federal Reserve raised its forecast for US personal consumption inflation inflation this year to 4.3% from 2.6% three months ago. For next year, it will be raised from 2.3% to 2.7%.
In a statement on monetary policy direction, the FOMC said, “Russian invasion of Ukraine is causing tremendous economic difficulties. will give,” he analyzed.
The Fed also lowered its real GDP growth forecast for this year from 4.0% to 2.8%. This also seems to have taken into account the shock wave of the Ukraine crisis. The unemployment rate remained unchanged at its previous estimate of 3.5%.
Markets are watching to see if Fed Chairman Jerome Powell will send further hawkish signals at a press conference.