While a 0.75% jump became the consensus view, some, including hedge fund billionaire Bill Ackman, suggested the economy would be better served if the Fed took drastic action by implementing a 1% hike. “This is all about signaling to the market that the Fed is now fully engaged in the current economic problem after months of missteps and transitory fantasies,” said Sean Bonner, a Wall Street veteran and CEO of Guild Financial. Wall Street had long anticipated another half-percentage-point hike this month - but the mood changed after a report surfaced that economic officials could implement an even larger increase due to alarming inflation data. Fed Chair Jerome Powell is under pressure to tamp down inflation. The Nasdaq rose 270.80 points, or 2.5%, and the S&P 500 climbed 54 points, or nearly 1.5%.
Stocks rose after Powell spoke to reporters, with the Dow Jones Industrial Average rising 303.70 points, or 1%, to 30,668.53. That would mark the highest level since 2008. “From the perspective of today, either a 50-basis point or a 75-basis point increase seems most likely at our next meeting.”įed officials said they expect the benchmark rate to hit a range of 3.25% to 3.5% by the end of this year. “Clearly, today’s 75 basis point increase is an unusually large one and I do not expect moves of this size to be common,” Powell added. “We therefore will need to be nimble in responding to incoming data and the evolving outlook.” New York Post composite “Inflation has obviously surprised to the upside over the past year - and further surprises could be in store,” Powell admitted in a press conference after the Fed’s meeting on Wednesday. “Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures,” the FOMC said in a statement.įed Chair Jerome Powell reiterated that the central bank was “moving expeditiously” to address inflation and acknowledged the historic nature of Wednesday’s increase. The federal data showed inflation accelerated to a higher-than-expected 8.6% last month, the sharpest rate since December 1981. The hike was in line with revised expectations after last week’s release of the Consumer Price Index for May.
The hike moved the benchmark short-term rate to a range of 1.5% to 1.75%. The rate-making Federal Open Market Committee announced the hike of 0.75%, or 75 basis points, at the conclusion of its two-day meeting. The Federal Reserve approved the largest hike to its benchmark interest rate since 1994 on Wednesday as officials frantically seek to tamp down the decades-high inflation hitting household budgets. Not so cheesy: NYC’s 99 cent pizza joints eking by Less holiday flare: Even Fourth of July fireworks aren’t safe from Bidenflation, insider says
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