The Fed made the expected interest rate decision announcement throughout the day. The US Federal Reserve decided to increase interest rates for the first time in 3 years.
The US Federal Reserve (FED) has decided to increase interest rates. As a result of increasing the policy rate by 25 basis points in line with the expectations, the FED decided to increase the interest rate for the first time since November 2018.
In addition, the FED signaled that interest rate hikes would continue in the rest of the year.
The Fed decided to raise interest rates for the first time in years.
In the decision taken with a 1 to 8 vote advantage, St. Louis Fed Chairman James Bullard voted for a 50 basis point rate hike.
With the inflation exceeding 7 percent, the FED, which decided to increase interest rates for the first time in 3 years, gave the green light that there could be 6 more interest rate hikes throughout 2022.
Fed Chairman Jerome Hayden Powell made a statement:
Fed Chairman Powell made remarkable statements about the interest rate decision. “We will start to reduce our balance sheet at one of the next meetings. Economic activity increased strongly by 5.5 percent last year,” Powell said, continuing his statement as follows:
“Federal Open Market Committee participants predict strong growth, even as the invasion of Ukraine by Russia and related events put downward pressure on economic activity. We have a 2.8 percent forecast for growth this year. 2.2 percent for next year and We have a 2 percent growth forecast for 2024.
The job market also continued to strengthen. In the first 2 months of the year, there was an increase in employment of more than 1 million. In February, the unemployment rate returned to the pre-pandemic period with 3.8. The improvement in job market conditions spread to the grassroots. Participation in the job market has also increased, but at this point, we see that there is a shortage of employees. Employers are struggling to find workers and wages are rising at a rate not seen in years, but respondents expect the job market to remain strong.
Inflation is hovering above our long-term target. High energy prices push inflation up. The rise in crude oil and other commodity prices and the rise in prices due to the Russian invasion of Ukraine will put pressure on the United States in the medium term. We are aware that high inflation creates difficulties. We know that there are people who have difficulties in meeting the most basic expenses such as food, real estate and transportation. We will do our best to support the ongoing expansion and price stability. We expect inflation to fall to 2 percent with an appropriate tightening in monetary policy. The participants’ inflation forecast for this year is 4.3 percent, 2.7 percent for next year and 2.3 percent for 2024.
At our meeting today, we had a good discussion about narrowing the balance sheet. At one of the next meetings, we will start the balance sheet reduction. If necessary, the FED will act more quickly on price increases. The interest rate step is on the agenda at every meeting, the size of the movement depends on the economy.”