Fed raises interest rates for the first time since 2018 [View all]
Source: Yahoo Finance
The Federal Reserve on Wednesday raised short-term interest rates for the first time since 2018, as high inflation pushes the central bank to pull back on its extraordinary pandemic-era support.
The U.S. central bank lifted its benchmark Federal Funds Rate by 0.25%, to a target range of between 0.25% and 0.50%. The Fed also noted that the economic outlook remains "highly uncertain" in the face of the war in Ukraine.
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Projections released by the policy-setting Federal Open Market Committee signal the likelihood of the Fed raising rates up to six more times this year (which would mean rates 1.75% higher at the end of this year than last).
The Fed, however, is warning that inflation will not immediately abate in response to its initial interest rate hikes. The central bank now projects prices to rise by 4.3% over the course of 2022, well above the 2.6% pace it had projected in December.
Read more: https://finance.yahoo.com/news/fed-fomc-monetary-policy-decision-march-2022-131719859.html
The S&P 500 ended up 2.24% for the day (that's equivalent to the DOW up 750 in same-percent terms. The Dow actually closed up 519 points, a 1.55% gain). Stock indices actually fell after the announcement, but rose in the last half hour of trading.
This was a long-expected move. Actually, a rate rise of 0.50% was expected until, uh, Russia decided to, umm, secure its western borders, and put the world economy into turmoil. That dropped expectations of a rate hike to 0.25%. But anyway, I think there was relief that the rate hike wasn't higher.
The last time the Fed raised the Fed Funds rate, as the article mentions, was in 2018. The stock market ended that year down.
More on today's stock market tick tock:
https://finance.yahoo.com/news/stock-market-news-live-updates-march-16-2022-221433948.html
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