The Federal Reserve Banks have further hiked the base rate by 75 points to 4%, the Fed said.
“The Committee decided to raise the target range for the federal funds rate to 3-3/4 to 4 percent.”
That’s in line with expectations with stocks turning green while bitcoin volatility has also titled up for now.
“The Committee anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time,” Fed said.
But there was something new in this release compared to the September release with the FOMC statement containing suggestions Fed will now start taking into account the effect of previous hikes.
“In determining the pace of future increases in the target range, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.”
This presumably points to a slowdown in interest raises for the next meeting in December, with the only other change being the addition of “sufficiently restrictive.”
“The Committee anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time.”
Previously the statement said they anticipated ongoing hikes, full stop. While now they’ve added qualifiers, indicating Fed will be more dovish.
Combined, the addition of these two sentences may give credence to suggestions of a pivots as further crisis hikes of 75 basis points now seem unlikely.
The Fed chair Jerome Powell is to hold a conference shortly where further details will be provided on just what the market should now expect moving forward.