China News Agency, New York, July 27 (Reporter Wang Fan) The US Federal Reserve announced on the 27th that it will raise the target range of the federal funds rate by 75 basis points to a level of 2.25% to 2.5%, which is in line with market expectations.

This is the second consecutive rate hike by the Fed by 75 basis points.

　　U.S. spending and production indicators have softened recently, but job growth has been strong in recent months and the unemployment rate has remained low, the Fed said in a statement after its two-day monetary policy meeting.

Inflation remains high, reflecting supply and demand imbalances related to the Covid-19 pandemic, rising food and 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 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 2.25% and 2.5%, with the expectation that such continued increases would be appropriate.

In addition, the Fed will continue to shrink its balance sheet.

The statement emphasized that the Fed will be firmly committed to bringing inflation back to 2%.

　　According to the monetary policy implementation decision announced on the same day, the Federal Reserve will accelerate the "shrinking of the balance sheet" as planned from September, that is, increase the monthly reduction limit of US Treasuries to 60 billion US dollars, and increase agency bonds and agency mortgage-backed securities (MBS) 's monthly shrinking cap to $35 billion.

Currently, the two reduction caps are $30 billion per month and $17.5 billion per month, respectively.

　　Federal Reserve Chairman Jerome Powell said at a press conference after the regular monetary policy meeting that after this 75 basis points of interest rate hike, the target range of the federal funds rate is close to the neutral interest rate level.

While inflation data is still on an upward trend, the economy is likely to be in a period when the data has not fully reflected the effects of monetary policy tightening, and he believes that interest rate hikes and "shrinking the balance sheet" have actually had an effect.

　　Powell said that the Federal Reserve may also raise interest rates by a large margin at the regular monetary policy meeting in September, and the specific extent will be determined by subsequent economic data, and the pace of interest rate hikes will be gradually slowed down in the future.

He emphasized that there is no economic recession in the United States at present, and he does not believe that the United States must experience a recession, but the possibility of a soft landing of the economy is shrinking, and the Fed's first priority is still to stabilize prices.

　　After Powell's speech, the three major U.S. stock market indexes pulled up in the late session.

As of the close on the 27th, the Dow Jones Industrial Average rose 436.05 points, or 1.37%, to close at 32,197.59 points; the Nasdaq Composite Index rose 469.85 points, or 4.06%, to close at 12,032.42 points; the Standard & Poor's 500 stock index rose 102.56 points , or 2.62 percent, to end at 4,023.61.

　　U.S. financial media CNBC quoted analysts as saying that after Powell pointed out that the U.S. economy has not yet experienced a recession, investors seemed to be encouraged, and U.S. stock indexes rose across the board.

Regarding the effect of "shrinking the balance sheet", because "shrinking the balance sheet" is another mechanism used by the Fed to affect financial conditions, the flow and stock effects generated by it are equivalent to raising interest rates by dozens of basis points. "It will accelerate, with markets expecting the Fed to hike rates by at least 50 basis points in September.

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