China News Agency, New York, June 15 (Reporter Wang Fan) The US Federal Reserve announced on the 15th that it will raise the target range of the federal funds rate by 75 basis points to a level of 1.5% to 1.75%.
It was the largest single rate hike by the Fed since 1994.
The picture shows Federal Reserve Chairman Powell attending a press conference after the regular monetary policy meeting that day.
Photo by China News Agency reporter Chen Mengtong
Overall U.S. economic activity picked up after a slight dip in the first quarter, the Federal Reserve said in a statement after its two-day monetary policy meeting.
Employment growth has been strong in recent months and the unemployment rate has remained low.
Inflation remains high, reflecting supply and demand imbalances related to the coronavirus pandemic, higher energy prices and broader price pressures.
In addition, events such as the Russia-Ukraine conflict have created additional upward pressure on inflation and weighed on the global economy.
The picture shows Federal Reserve Chairman Powell attending a press conference after the regular monetary policy meeting that day.
Photo by China News Agency reporter Chen Mengtong
The Fed places high priority on inflation risks and seeks to achieve its goals of full employment and a longer-term inflation rate of 2 percent, the statement said.
In support of these goals, the Fed decided to raise the target range for the federal funds rate to between 1.5% and 1.75%, and expects that continued increases are appropriate.
In addition, the Fed will continue to "shrink the balance sheet" in accordance with the "Plan to Reduce the Size of the Fed's Balance Sheet" released in May.
The statement emphasized that the Fed will be firmly committed to bringing inflation back to 2%.
The picture shows Federal Reserve Chairman Powell attending a press conference after the regular monetary policy meeting that day.
Photo by China News Agency reporter Chen Mengtong
On the same day, the Federal Reserve also released a summary of economic forecasts that have attracted much attention from financial markets.
The summary shows that compared with March, the Fed lowered its median GDP growth forecast for this year by 1.1 percentage points to 1.7%, and raised its inflation forecast and the median core PCE price index by 0.2 percentage points to 4.3% this year.
In addition, the dot plot of the rate hike path in the summary shows that Fed officials predict that the median federal funds rate will rise to 3.4% by the end of 2022 and 3.8% by the end of 2023, suggesting that there will be multiple hikes in the future. interest.
The picture shows Federal Reserve Chairman Powell attending a press conference after the regular monetary policy meeting that day.
Photo by China News Agency reporter Chen Mengtong
Fed Chairman Powell said at a press conference after the regular monetary policy meeting that curbing inflation is still the Fed's top priority, and the Fed may raise interest rates by 75 basis points or 50 basis points next month, but this rate hike will not become the norm. .
Regarding the economic recession risk that the market is worried about, Powell said that the U.S. economy is fully prepared for raising interest rates, and the Fed will maintain flexibility in formulating monetary policy and will not try to trigger a recession.
The picture shows Federal Reserve Chairman Powell attending a press conference after the regular monetary policy meeting that day.
Photo by China News Agency reporter Chen Mengtong
After Powell's speech, the three major U.S. stock market indexes maintained their gains for the day.
As of the close, the Dow Jones Industrial Average rose 303.70 points, or 1%, to close at 30,668.53; the Nasdaq Composite added 270.81 points, or 2.5%, to close at 11,099.16; the S&P 500 rose 54.51 points, or 1.46%, to close at 3789.99.
The Wall Street Journal said that while most Fed officials had previously signaled a 50-basis-point rate hike in June, the Labor Department's consumer price index (CPI) data released on Friday brought a new twist to the situation. .
Investors were not surprised by the decision to raise rates by 75 basis points.
What is worth noting in this statement is that the Fed deleted the statement that "the labor market will remain strong", which shows that it is no longer easy to maintain a low unemployment rate in the process of reducing inflation, and it is increasingly difficult to achieve a "soft landing" of the economy. bigger.
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