Fed raises federal funds rate by 25 basis points
Federal Reserve Chairman Jerome Powell attends a press conference in Washington, March 22.Photo by Xinhua News Agency reporter Liu Jie
Xinhua News Agency, Washington, March 22 (Reporter Xu Yuan) The US Federal Reserve Board concluded its two-day monetary policy meeting on the 22nd and announced that it would raise the target range of the federal funds rate by 25 basis points to between 4.75% and 5%. to the highest level since September 2007.
The Federal Reserve said in a statement issued on the same day that recent indicators have shown modest growth in spending and production, and employment growth has accelerated, but inflation remains high. In order to support maximum employment and the long-term inflation target of 2%, the Federal Reserve decided to raise the target range of the federal funds rate to between 4.75% and 5%. The Fed will closely monitor new information and assess its implications for monetary policy, anticipating that “some additional policy tightening may be appropriate.”
Recent developments could lead to tighter credit conditions for households and businesses and weigh on economic activity, employment and inflation, the Fed said. The Fed is not yet sure about the magnitude of these effects. In the future, the Federal Reserve will still pay close attention to inflation risks and firmly commit to returning the inflation rate to the 2% target. The Fed will be prepared to adjust the stance of monetary policy appropriately if risks arise that could impede the achievement of its goals.
On March 22, US Federal Reserve Chairman Jerome Powell (first from left) attended a press conference in Washington.Photo by Xinhua News Agency reporter Liu Jie
On the same day, the Federal Reserve also released the latest economic outlook forecast. It is expected that the US economy will grow by 0.4% and 1.2% this year and next, respectively, which are 0.1 and 0.4 percentage points lower than the forecasts in December last year. The Federal Reserve expects the U.S. unemployment rate to be 4.5 percent this year, down 0.1 percentage point from its previous forecast, and the unemployment rate will rise to 4.6 percent next year.
In terms of prices, the Federal Reserve expects the inflation rate to rise to 3.3% this year, and the core inflation rate after excluding food and energy prices is 3.6%, which is much higher than the 2% inflation target. Inflation is expected to slow to 2.5% next year.
Based on the economic outlook, a large majority of FOMC members believe that the federal funds rate could be higher than 5% this year. Among them, 10 members expect interest rates to rise to between 5% and 5.25% this year. Most members expect the Fed to cut rates in 2024. Fourteen members expect interest rates to be lower than 4.75% next year.