Here are key takeaways from the Federal Reserve‘s interest-rate decision and statement on Wednesday:
- Federal Open Market Committee votes unanimously to raise benchmark rate by 25 basis points, as forecast, to target range of 4.75%-5%; second straight hike of that size following December’s 50 basis-point hike and the four straight 75 basis-point moves before that
- “Dot plot” of rate forecasts shows 5.1% median estimate for end-2023, unchanged from last update in December; end-2024 projection rises to 4.3% from 4.1%
- Statement says FOMC “anticipates that some additional policy firming may be appropriate,” omitting prior language forecasting “ongoing increases” in main rate
- Fed says US banking system is “sound and resilient” but the financial turmoil is “likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring and inflation” to an uncertain extent; also removes reference to inflation having eased, instead saying it “remains elevated”
- FOMC continues pace of balance-sheet runoff, also known as quantitative tightening, leaving in place monthly caps of $60 billion for Treasuries that are allowed to mature without being reinvested and $35 billion for mortgage-backed securities.