Fed rate hike: As it was expected that the US Central Bank Fed Reserve will increase its interest rates marginally, the same was seen. The Fed has announced a rate hike of 0.25 percent. Now the Fed rate is between 4.75 per cent and 5 per cent, but what everyone was waiting for has also been indicated by Fed Chief Jerome Powell. In view of the decline in the banking and financial sector, Powell has indicated to put a brake on the increase in the policy rate in future.
FOMC said that the US banking system is strong as well as very flexible. Let us tell you that the Fed has increased interest rates for the 9th consecutive time since 2022. This is the second consecutive time when the Fed has increased only 25 basis points. Earlier, in the Fed meeting of February too, there was an increase of 25 basis points only.
will put full stop
FOMC said that there is no indication of future hike, now it will depend to a great extent on the coming data. The softening trend in the statement of the Central Bank has been seen in the midst of the banking crisis, which has raised concerns on the stability of the system. The FOMC said that the US banking system is strong and resilient. Due to the recent happenings, credit conditions for families and businesses may get tighter. Also, there is a possibility of a burden on economic activity, hiring and inflation. The extent of their impact is uncertain. The committee remains more alert about the inflation risk.
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Signs of interest rate cut before the end of the year
Earlier this month, Powell indicated that the central bank may have to take a more aggressive approach to combating inflation. But the fast-growing banking crisis put a brake on this aggressive move. Along with this, a sentiment has been created in the market that before the end of this year, the Fed will start cutting interest rates. The officials also revised their economic projections. He raised his inflation forecast for this year to 3.3 per cent from 3.1 per cent in December. Unemployment was reduced by one notch to 4.5 percent, while the gross GDP estimate was kept at 0.4 percent.
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US markets fall
The US stock market is seeing a decline on Wednesday after the Federal Reserve announced a modest increase in interest rates as expected. The Dow Jones Industrial Average has shown a decline of 102 points or 0.3 percent. The S&P 500 is down 0.1 percent. The Nasdaq Composite is up 0.35 percent. According to experts, this decision is not surprising for the stock market. On the other hand, talking about Asian markets, Hong Kong’s Hengseng is trading with a speed of about two percent. London’s FTSE is also seeing a gain of 0.44 per cent. By the way, America’s First Republic Bank is trading with a decline of more than 8 percent.