FOMC raises the target for Fed funds rate by 25bp to 1.75-2.00%

Eren Sengezer FXStreet

Following its 2-day meeting, the Federal Open Market Committee announced that it would hike the benchmark interest rate by 25 basis points to the target range of 1.75% - 2% in a widely expected decision. Jerome Powell, Chair of the Board of Governors of the Federal Reserve System, is scheduled to deliver his comments on the monetary policy in a press conference at 18:30 GMT.

Key highlights from the official statement (via Reuters)

Fed drops reference from previous statements that it expected rates to be below neutral rate for 'some time'.
Fed says economic activity rising at a solid rate, previously described growth as moderate.
Fed repeats that stance of monetary policy remains accommodative.
Fed says further gradual rate increases will be consistent with sustained economic growth, strong labor market and inflation near 2 percent over medium term.
Fed says indicators of longer-run inflation expectations are little changed; drops previous references to market and survey-based measures of inflation outlook.
Fed says household spending growth has picked up.
Fed repeats near-term risks to the economy appear "Roughly balanced".
Fed vote in favor of policy was unanimous.
Fed says raises interest on excess reserves rate to 1.95 pct from 1.75 pct.
Fed says setting ioer rate 5 basis points below top of target range for funds rate aims to keep market rates well within range.

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About the FOMC statement

Following the Fed's rate decision, the FOMC releases its statement regarding monetary policy. The statement may influence the volatility of USD and determine a short-term positive or negative trend. A hawkish view is considered as positive, or bullish for the USD, whereas a dovish view is considered as negative, or bearish.

About FOMC economic projections

This report, released by Federal Reserve, includes the FOMC's projection for inflation and economic growth over the next 2 years and, more importantly, a breakdown of individual FOMC member's interest rate forecasts.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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