The Federal Reserve, as analysts expected, has raised interest rates to their highest level since 2001.
Following its two-day July meeting, the Federal Open Market Committee announced a 25 basis point hike. This continued the Fed’s current tightening cycle, which was briefly interrupted by a pause in rate hikes last month.
In fact, the move bore a striking resemblance to the hike the FOMC issued in May, according to Bleakley Financial’s Peter Boockvar.
“Whoever wrote today’s FOMC statement didn’t have to do much. They just copied and pasted the May sentence on a 25 bps rate hike back into the statement after taking it out in June,” Boockvar wrote.
Interest rates now stand at a target range of 5.25%-5.5%, the midpoint of which is the highest it’s been in more than two decades.
Chairman Jerome Powell indicated at his press conference that the central bank would take a “data-dependent” approach in determining whether to raise rates at its next meeting in October.
There is a chance the current tightening cycle could come to an end if inflation continues to cool toward the Fed’s 2% target, he said, but noted that there is a “long way to go.”
"I would say it's certainly possible that we will raise funds again at the September meeting if the data warranted," Powell said. "And I would also say it's possible that we would choose to hold steady and we're going to be making careful assessments, as I said, meeting by meeting."
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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