THURSDAY, March 28, 2024
nationthailand

Fed raises rates by half point, starts balance sheet reduction June 1

Fed raises rates by half point, starts balance sheet reduction June 1

The Federal Reserve on Wednesday (May 4) raised its overnight interest rate by half a percentage point, the biggest jump in 22 years, and the U.S. central bank's chief made an appeal to Americans to hang tough while officials take the hard measures to bring it under control.

In a widely expected move, the Fed set its target federal funds rate to a range between 0.75% and 1% in a unanimous decision, with further rises in borrowing costs of a perhaps similar magnitude likely to follow.

Fed Chair Jerome Powell, however, told reporters that a rate increase of as much as three-quarters of a percentage point is not something officials are "actively considering."

The Fed also said it would start next month to reduce the roughly $9 trillion stash of assets accumulated during the coronavirus pandemic in another lever to bring inflation under control.

U.S. stock markets moved sharply higher after the announcement, extending gains after Powell poured cold water on the idea of hiking rates by three-quarters of a percentage point in the near future.

Yields on government bonds moved lower.

The dollar weakened against a basket of major trading partners' currencies.

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