The Federal Open Market Committee (FOMC) has announced a 75 basis point increase to the federal funds rate. The funds rate now sits at 3.75% to 4.00%.

The latest U.S. inflation data has the Consumer Price Index (CPI) at 8.2% for September. October’s report will be available on November 10, 2022. The Committee’s primary goal is to achieve maximum employment and to keep inflation at its 2% target over the long run.

Job gains have been strong and the unemployment rate have stayed low. Inflation remains elevated due to supply and demand variances, higher food and energy prices and broader price pressures.

Russia’s war against Ukraine remains a primary cause of immense human and economic hardship.

“Ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2% over time,” the Committee stated in its press release.

With respect to the pace of future interest rate increases, the Committee will take into account the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.

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.