The U.S. Federal Reserve announced the results of its June interest rate meeting in the early hours of today (16th) Hong Kong time. Officials decided to raise interest rates by 0.75% to a range of 1.5% to 1.75%, the largest rate since 1994, in line with market expectations.
After the results were announced, the Dow lost nearly 200 points of gain and went backwards.
The plan to shrink the balance sheet remains unchanged, and it strongly insists on reducing inflation to 2%
The Federal Reserve said U.S. economic activity appeared to be improving after a first-quarter decline, with job growth booming in recent months and unemployment remaining low.
Inflation continued to rise, reflecting the effects of the pandemic, high energy prices and widespread price pressures.
In addition, the Russian invasion of Ukraine caused severe humanitarian and economic hardship, driving up inflation and affecting global economic activity.
China's lockdown measures due to the epidemic may also exacerbate the problem of blocked supply chains.
The bureau continues to pursue the highest employment rate and maintain inflation at 2% for a long time, so the interest rate is set at 1.5 to 1.75%, and it is expected that it is appropriate to continue to raise interest rates.
The bureau will maintain the balance sheet reduction plan set in May, that is, a maximum of 47.5 billion US dollars per month, while strongly insisting that inflation return to 2%.
Raise interest rates to 3.4% this year, slashing GDP growth forecasts
The Fed's dot plot shows rates will rise to 3.4 percent by the end of the year, 1.5 percentage points higher than forecast in March.
Officials also slashed their economic growth forecast for this year to 1.7 percent from 2.8 percent in March, and raised their inflation forecast to 5.2 percent from 4.3 percent.
The interest rate may increase by 0.75% next month
Federal Reserve Chairman Jerome Powell said at a press conference that the bureau is rapidly adjusting interest rates, indicating that the rate increase in July is more likely to be 0.5% or 0.75%, but it is expected that a 0.75% increase in interest rates will not become the norm.
He also said that inflation is expected to start to flatten now, and he hopes to see the inflation data fall several times in a row.
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