The Federal Reserveas expected, raised the target rate on the Fed Funds by half a pointbringing it to an inclusive range between 4.25 and 4.5%. The American Central Bank communicates it on its website.
The Federal Reserve with this operation “seeks to achieve maximum employment it’s a 2% inflation rate in the long run”, as was explained by the central banking institution itself. The Fed assesses that the current pace of interest rate hikes will “remain appropriate”, and estimates that Fed Funds rates will reach a peak of 5.25% in 2023. This can be read in the press release of the Central Bank’s Monetary Policy Committee. The value above 5.25% is decidedly higher than the main market estimates.
Wall Street which, awaiting the announcement, was showing a positive trend, saw its indices turn negative with the official indiscretion. The US Stock Exchange recorded -0.48% (Dow Jones), the Nasdaq -0.88% and the S&P500 index -0.59%.
The Federal Reserve expects a growth of the US economy of 0.5% in 20231.6% in 2024 and 1.8% in 2025. Inflation, on the other hand, is estimated at 3.1% in 2023, 2.5% in 2024 and 2.1% in 2025 .
