Right on Target, FOMC Fulfills Promise of 50 Basis Points


 At 3 am the Open Market Committee (FOMC) meeting implemented an interest rate increase of 50 basis points, in line with the market consensus forecast.

It brought the total rate hiked by the Federal Reserve (Fed) to 4.50%, a small increase compared to 75 basis points the previous 4 times.

The small increase comes in line with Fed Chairman Jerome Powell's earlier dovish comments based on the economy's response to the cumulative effect of policy tightening that has seen inflation decline.

Even so, Powell said in his official statement that the increase was 'still the largest in history' and 'the Fed will continue to raise rates again' after this.

Looking at the overall market itself, the inflation rate was still high at 7.1% in November although it was down from 7.7% during October.

Like to be reminded that the United States (US) inflation rate previously peaked as high as 9.1% in June.

Going forward the Fed released a forecast for the US economy to grow at 0.5% next year while the unemployment rate is expected to rise to 4.6%.

As for the inflation rate, most economists predict that price increases will remain above 3% in 2025, which is higher than the Fed's 2% target.

Principal Asset Management's head of global strategy, Seema Shah, commented that the Fed is still skeptical of the prospect of a recession, but the average official considers the risk of a downward tilt to the economic outlook.