Five Key Takeaways From Fed’s March Decision to Raise Rates a Quarter Point

The Marriner S. Eccles Federal Reserve building in Washington, D.C., US, on Tuesday, Aug. 23, 2022. The Federal Reserve chair's speech this week at the Jackson Hole symposium is expected to offer clues on the Fed's tightening path, with hedge funds making record bets that the US central bank will stick to its hawkish script. , Bloomberg

Catarina Saraiva and Scott Lanman, Bloomberg News

Mar 22, 2023

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Here are key takeaways from the Federal Reserve's interest-rate decision and statement on Wednesday:
  • Federal Open Market Committee votes unanimously to raise benchmark rate by 25 basis points, as forecast, to target range of 4.75%-5%; second straight hike of that size following December's 50 basis-point hike and the four straight 75 basis-point moves before that
  • “Dot plot” of rate forecasts shows 5.1% median estimate for end-2023, unchanged from last update in December; end-2024 projection rises to 4.3% from 4.1%
  • Statement says FOMC “anticipates that some additional policy firming may be appropriate,” omitting prior language forecasting “ongoing increases” in main rate
  • Fed says US banking system is “sound and resilient” but the financial turmoil is “likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring and inflation” to an uncertain extent; also removes reference to inflation having eased, instead saying it “remains elevated”
  • FOMC continues pace of balance-sheet runoff, also known as quantitative tightening, leaving in place monthly caps of $60 billion for Treasuries that are allowed to mature without being reinvested and $35 billion for mortgage-backed securities

(Bloomberg) -- For Bloomberg's TOPLive blog on the Fed decision and press conference, click here

Follow live coverage of the Fed decision online here.

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