For the first time since 2018, the Federal Reserve (Fed) decided to raise interest rates by 25 basis points to 0.50% thus meeting broad market expectations.
In addition, the US central bank also signaled for 6 interest rate hikes this year, with the Fed Fund rate seen at a median of 1.9% at the end of this year and 2.8% by the end of 2024.
Following the decision, Chairman Jerome Powell told a news conference that the economy was strong enough to implement rate hikes and sustain current growth in the labor market.
In addition, he also stressed that central banks now need to focus on limiting the impact of price increases on households in America.
Even with his latest move, inflation is expected to remain above the Fed’s 2% target until 2024 and Powell says policymakers will not hesitate to raise rates more aggressively if they don’t see any progress.
"Every meeting is a direct meeting for rate hikes," Powell said, stressing that the Fed could implement more hikes by also reducing its large bond holdings.
Meanwhile, the Fed also lowered its US economic growth estimate for 2022 to 2.8% from its previous projection in December by 4% after they began analyzing new risks facing the global economy.
According to the Fed, Russia’s invasion of Ukraine has created new uncertainties for the US that create short -term inflationary pressures and burden economic activity.
