Fed approves hike that takes interest rates to highest level in more than 22 years

https://www.cnbc.com/2023/07/26/fed-meeting-july-2023-.html

The Federal Reserve on Wednesday approved a much-anticipated interest rate hike that takes benchmark borrowing costs to their highest level in more than 22 years.

In a move that financial markets had completely priced in, the central bank’s Federal Open Market Committee raised its funds rate by a quarter percentage point to a target range of 5.25%-5.5%. The midpoint of that target range would be the highest level for the benchmark rate since early 2001.

Markets were watching for signs that the hike could be the last before Fed officials take a break to watch how the previous hikes are impacting economic conditions. While policymakers indicated at the June meeting that two rate hikes are coming this year, markets are pricing in a better-than-even chance that there won’t be any more moves this year.

The post-meeting statement offered only a vague reference to what will guide the FOMC’s future moves.

“The Committee will continue to assess additional information and its implications for monetary policy,” the statement said in a line that was added from the previous months’ communication. That echoes a data-dependent approach – as opposed to a set schedule – that virtually all central bank officials have embraced in recent public statements.

The hike received unanimous approval from voting committee members.

The only other change of note in the statement was an upgrade of economic growth to “moderate” from “modest” at the June meeting despite expectations for at least a mild recession ahead. The statement again described inflation as “elevated” and job gains as “robust.”