The Federal Reserve raised interest rates by 75 basis points for the first time in 28 years. According to mainstream financial media reports in the United States, Fed officials admit that measures to curb inflation by raising interest rates will lead to an increase in the unemployment rate in the United States. The Federal Reserve raised interest rates by 75 basis points for the first time in 28 years.
The Federal Reserve raised interest rates by 75 basis points for the first time in 28 years. On June 5th, the Federal Reserve announced that it would raise the target range of the federal funds rate by 75 basis points to 1.5% to 1.75%. This is the biggest rate hike by the Federal Reserve since 1994.
The Federal Reserve issued a statement after the two-day monetary policy meeting, saying that the overall economic activity in the United States rebounded after a slight decline in the first quarter. In recent months, employment growth has been strong and the unemployment rate has remained at a low level. Inflation remains high, reflecting the imbalance between supply and demand related to the COVID-19 epidemic, rising energy prices and broader price pressures. In addition, events such as Russia and Ukraine have brought additional upward pressure on inflation and put pressure on the global economy.
The statement said that the Fed attaches great importance to inflation risks and seeks to achieve the goal of full employment and a longer-term inflation rate of 2%. In order to support these goals, the Federal Reserve decided to raise the target range of the federal funds rate to 1.5% to 1.75%, and expected that this continuous increase would be appropriate. In addition, the Fed will continue to "shrink its balance sheet" according to the "Plan for Reducing the Size of the Fed's Balance Sheet" released in May. The statement stressed that the Fed will be firmly committed to bringing the inflation rate back to 2%.
On the same day, the Federal Reserve also released a summary of economic forecasts that attracted much attention from financial markets. Compared with March, the Federal Reserve lowered the median GDP growth forecast this year by 1. 1 percentage point to 1.7%, and raised the inflation forecast and PCE price index by 0.2 percentage point to 4.3%. In addition, the bitmap of the interest rate hike path in the summary shows that Fed officials predict that the median federal funds rate will rise to 3.4% by the end of 2022 and 3.8% by the end of 2023, suggesting that interest rates will be raised several times in the future.
At the press conference after the regular monetary policy meeting, Federal Reserve Chairman Powell said that curbing inflation is still the top priority of the Fed. The Fed may raise interest rates by 75 basis points or 50 basis points next month, but this rate hike will not become the norm. Regarding the "recession risk" that the market is worried about, Powell said that the US economy is fully prepared to raise interest rates, and the Fed will remain flexible in formulating monetary policy and will not try to trigger an economic recession.
After Powell's speech, the three major indexes of the US stock market maintained the gains of the day. At the close, the Dow Jones Industrial Average rose 303.70 points, or 1%, to close at 30,668.53 points. The Nasdaq Composite Index rose 270.8 1 point, or 2.5%, to 1 1099. 16. The S&P 500 index rose 54.5 1 point, or 1.46%, to close at 3,789.99 points.
The Wall Street Journal said that although the signal released by most Fed officials was to raise interest rates by 50 basis points in June, the consumer price index (CPI) data released by the Labor Department last Friday brought about new changes in the situation. Investors are not surprised by the decision to raise interest rates by 75 basis points. It is worth noting in this statement that the Fed deleted the expression that "the labor market will remain strong", which shows that it is not easy to keep the unemployment rate low while reducing inflation, and it is increasingly difficult to achieve a "soft landing" of the economy.
The Federal Reserve raised interest rates by 75 basis points for the first time in 28 years. 2 On the morning of 15 local time and 16 Beijing time, the Federal Reserve announced the statement of the FOMC meeting in June. The statement said that the Fed raised the target range of the federal funds rate by 75 basis points to 1.5%- 1.75%. This is the first time since 1994 that the rate hike has reached 75 basis points, highlighting the urgency of the Fed's active tightening of monetary policy.
The outside world is worried that the Fed will raise interest rates sharply or aggravate the risk of recession in the United States.
Analysts believe that the CPI data in the United States unexpectedly "left the chart" in May, and the PPI data in May continued to hover at a historical high, leaving the outside world with no sign that the US inflation situation is out of the "danger". According to mainstream financial media reports in the United States, Fed officials admit that measures to curb inflation by raising interest rates will lead to an increase in the unemployment rate in the United States.
However, inflationary pressure is still very high, and the Federal Reserve has taken a more radical approach to curb inflation, which has also aggravated people's concerns that the US economy is heading for recession. According to a recent survey conducted by the Financial Times this month, nearly 70% of the economists surveyed believe that the US economy will fall into recession in 2023, and some economists even said that "the recession will be this year".
Many investment banks expect that the Fed will continue to maintain a radical interest rate hike path.
At present, a number of Wall Street investment banks, including Goldman Sachs, predict that the Fed will raise interest rates by 75 basis points again in July, following a sharp increase of 75 basis points in June. By September, the rate hike may be slightly weakened and changed to 50 basis points.
Powell: A 75 basis point rate hike will not become the norm.
At 2:30 pm local time on June 5438+05, and at 2:30 am Beijing time on June 16, the chairman of the Federal Reserve, Powell, said at the press conference after the meeting, "It is unusual to raise interest rates by 75 basis points today, but this interest rate hike will not become the norm." Powell said that at present, the Fed is most likely to raise interest rates by 50 basis points or 75 basis points in July. He said that the Fed will take appropriate measures to raise interest rates according to future economic data.
The Federal Reserve has drastically lowered its forecast for US economic growth this year.
According to the latest economic outlook forecast released by the Federal Reserve on 15 local time, it is estimated that the US economy will grow by 1.7% in 2022, which is 1. 1 percentage point lower than the forecast in March. According to the latest forecast of the Federal Reserve, the year-on-year increase of the US personal consumption expenditure (PCE) price index is expected to rise to 5.2%, higher than the previous forecast of 4.3%, and the PCE core price index excluding food and energy prices will increase by 4.3%, higher than the previous forecast of 0.2 percentage points. PCE price index is an inflation indicator closely watched by the Federal Reserve.
The Federal Reserve raised interest rates by 75 basis points for the first time in 28 years. On June 5th, the Federal Reserve announced that it would raise interest rates by 75 basis points, raising the target range of federal funds interest rate to 65,438+0.5% to 65,438+0.75%. This is the largest rate hike by the Federal Reserve since 1994, which shows the urgency of controlling inflation.
On June 5438+05, the Federal Open Market Committee, the decision-making body of the Federal Reserve, issued a statement after a two-day monetary policy meeting, saying that the high inflation rate reflected the imbalance between supply and demand, rising energy prices and broader price pressure related to the COVID-19 epidemic. The Committee said it was "highly concerned about inflation risks".
At the press conference held after the meeting, Federal Reserve Chairman Paul said that at the monetary policy meeting in early May, members of the Committee generally believed that if the economic and financial situation developed as expected, the meeting should consider raising interest rates by 50 basis points. However, in the face of a series of recent developments, such as the unexpected increase in inflation data, the Committee believes it is necessary to raise interest rates more sharply at this meeting, while continuing to reduce the size of the balance sheet significantly.
Powell also said that from the current point of view, it is very likely to continue to raise interest rates by 50 basis points or 75 basis points at the next meeting, and the Committee will make a decision based on future economic data. He said that it is unusual to raise interest rates by 75 basis points, and it is expected that such interest rate hikes will not occur frequently.
The quarterly economic forecast released by the Federal Reserve on the same day showed that the median inflation expectation of Fed officials in the fourth quarter of this year was 5.2%, significantly higher than the 4.3% in March. The median inflation forecast is 2.6% at the end of 2023 and 2.2% at the end of 2024. Meanwhile, the median forecast of the federal funds rate by Fed officials at the end of this year is 3.4%, which is significantly higher than the 1.9% forecast in March. The median forecast of economic growth in the fourth quarter of this year is 1.7%, which is significantly lower than 2.8% in March.
According to the data released by the US Department of Labor on June 10, the US consumer price index (CPI) rose by 1% month-on-month and 8.6% year-on-year, which has been above 8% for three consecutive months.