![]() The changed approach came even though Powell in May had insisted that hiking by 75 basis points was not being considered. In recent days, though, CNBC and other media outlets reported that conditions were ripe for the Fed to go beyond that. Two consecutive quarters of negative growth is a widely used rule of thumb to delineate a recession.įed officials engaged in a public bout of hand-wringing heading into Wednesday's decision.įor weeks, policymakers had been insisting that half-point – or 50 basis point – increases could help arrest inflation. 'Strongly committed' to 2% inflation goalįirst-quarter growth declined at a 1.5% annualized pace, and an updated estimate Wednesday from the Atlanta Fed, through its GDPNow tracker, put the second quarter as flat. The funds rate also can drive rates on savings accounts and CDs higher, though the feed-through on that generally takes longer. However, it feeds directly through to a multitude of consumer debt products, such as adjustable-rate mortgages, credit cards and auto loans. The statement was approved by all FOMC members except for Kansas City Fed President Esther George, who preferred a smaller half-point increase.īanks use the rate as a benchmark for what they charge each other for short-term borrowing. ![]() Longer term, the committee's outlook for policy largely matches market projections which see a series of increases ahead that would take the funds rate to about 3.8%, its highest level since late 2007. Indeed, the estimates as expressed through the committee's summary of economic projections see inflation moving sharply lower in 2023, down to 2.6% headline and 2.7% core, expectations little changed from March. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures." "Job gains have been robust in recent months, and the unemployment rate has remained low. ![]() "Overall economic activity appears to have picked up after edging down in the first quarter," the statement said.
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