Fed Hikes Rates by 25 bps, Anticipates More in Future
The exterior of the Federal Reserve building in Washington, D.C.
The Federal Reserve raised its benchmark interest rate by 25 basis points on Wednesday, giving little to signal that it is ending its rate hiking cycle.
“Inflation has eased somewhat but remains elevated” the Federal Open Market Committee relayed in a statement.
The target range for the federal funds rate now sits at 4.5% to 4.75%. The Fed anticipates that more interest rate hikes will be necessary to return inflation to its 2% target.
With respect to future raises, the Fed will take into account the total tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and any economic and financial developments.
Indicators have shown modest growth in spending and production, while job gains have been robust and the unemployment rate has remained low.
“Russia's war against Ukraine is causing tremendous human and economic hardship and is contributing to elevated global uncertainty” the Committee asserted, indicating that the war is affecting inflation measures.
The Committee ended its statement by reiterating that if risks emerge that would impede its goal of returning inflation to its 2% target it would be prepared to adjust its stance on monetary policy.
The guidance we give our clients remains the same. Invest in blue chip stocks and take advantage of the rising interest rate environment with some short-term fixed-income securities such as bonds and Guaranteed Investment Certificates.
As always, if you have any questions about today’s Market Update, interest rates in the US or here in Canada, you can call us at 604-643-0101 or email cashgroup@cgf.com.
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