The Federal Reserve System (FRS) has raised the interest rate on federal funds (federal funds rate) by 75 basis points, now its range is 2.25-2.5% per annum, according to a communiqué of the Federal Committee for Operations on open market (FOMC) following the results of the July meeting.
The decision coincided with the forecasts of economists and market participants and was adopted unanimously by all 12 voting members of the FOMC. The Committee met in full force for the first time in recent years.
Thus, the Fed raised the rate by 75 bp. following the results of the second meeting in a row and noted that he expects to continue the course of tightening monetary policy, which will be expressed in an increase in rates and a decrease in the volume of assets on the balance sheet of the central bank.
The regulator’s management noted the weakening of production indicators and spending in the US economy, and at the same time pointed to a strong growth in the number of jobs in recent months, while maintaining low unemployment.
“Inflation remains elevated, reflecting the supply-demand imbalance caused by the pandemic, rising food and energy prices, and broader price pressures,” the document said.
The war in Ukraine creates “additional upward pressure on inflation and negatively affects global economic activity,” Fed officials said.
As previously reported, US consumer price growth accelerated to 9.1% in June from 8.6% in May, hitting a 40-year high.
“FOMC aims to achieve maximum employment and inflation at 2% in the long term,” – the message says.
“In evaluating the appropriateness of monetary policy, the FOMC will continue to monitor the impact of incoming information on the economic outlook. The Fed is ready to adjust its approach to monetary policy, if necessary, if risks arise that could hinder the achievement of FOMC goals,” the communiqué says. take into account a wide range of information, including data from the health sector, labor market conditions, inflationary pressures and inflation expectations, developments in financial markets, as well as international developments.”
American financial markets reacted moderately to the results of the Fed meeting, as they were largely taken into account in current quotes. The Dow Jones stock index by 21:16 Moscow time increased by 0.4%, while the Standard & Poor’s 500 rose by 1.44%, and the Nasdaq Composite – by 2.65%. The yield on 10-year US government bonds is still close to 2.77%.
