Fed raises rate by 50bps, pledges more hike in '23 citing inflation is not peaked yet

by   |  VIEW 282

Fed raises rate by 50bps, pledges more hike in '23 citing inflation is not peaked yet

Amid conflicting narratives on whether further US Fed rate-hikes would lead to a stagnation in the US economy and eventually a worsening of an impending recession, the US Federal Reserve had raised its benchmark borrowing costs by 50 bps (basis percentage points) between a range of 4.25 per cent and 4.50 per cent.

Aside from that, the US Fed also had pledged to at least a 75-bps rate-hike in 2023 citing that it has reasons to believe a rancorous inflation-surge across the US economy had yet to peaked. Following the two-day long meet of US Fed policymakers, the US Fed chair Jerome Powell had projected that the US economy is heading towards a plausible inertia in economic growth with an increase in unemployment rate.

In tandem, only 2 out of 19 US Fed policymakers had negated a concept that the US Central Bank’s benchmark borrowing cost will stay below a whacking 5.0 per cent next year, as the US economy has still been in a rattling battle against a 40-year-peak inflation.

US Fed hikes rate by 50-bps, projections an additional 75-bps hike next year

Meanwhile, addressing that the US Fed would act accordingly to heave the US inflation below its target range of 2.0 per cent, Fed said in a statement following its December policy meet, “The (Federal Open Market) Committee is highly attentive to inflation risks ...

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% over time”. US Fed is expecting its benchmark borrowing cost to fall below its target of 2.0 per cent by 2025.

Federal Reserve