The ‘Infrastructure Talent Pipeline Challenge’ was hosted by Joe Biden, the American president. On Wednesday, the central bank of the country increased the FFR by 75bps. Markets had already priced in the 75bps increase and forecast it well before the Federal Open Market Committee was convened.
The White House reported just before the rate increase that the Biden administration would allocate $13.5 billion to low-income households to heat their homes this winter. Due to red-hot inflation, Americans are now paying 28% more for heating their homes than last winter.
The FOMC announced Wednesday that “Recent indicators point towards modest growth in spending, and production.” The FOMC announced that job gains have been strong in recent months and that the unemployment rate has remained low. The central bank stated that inflation remains high due to supply and demand imbalances resulting from the pandemic, higher food prices and energy prices and wider price pressures.
Continue reading the Fed’s FOMC Statement
Russia’s war on Ukraine has caused immense economic and human suffering. These events and the war are adding upward pressure to inflation and weighing down global economic activity. The Committee is very attentive to inflation risks.
The Fed’s rate increase follows the U.S. central banks’ key inflation gauge, personal consumption expenditures price index report. This index showed a 0.5% increase in September. The most recent Consumer Price Index (CPI) report noted that U.S. consumer prices rose 8.2% in September.
Stocks, Bitcoin and precious metals rise on the possibility of a Fed Pivot
Stocks rose after the Fed announced a 75bps increase and Bitcoin (BTC). also jumped 1% within the hour following the announcement. The price per troy ounce of gold rose 0.98%, while fine silver prices increased by 1.58% from the $20 per annum region.
The Fed’s announcement suggested that the Fed might pivot and markets rebounded. The U.S. central banks stated that the committee would consider the cumulative tightening in monetary policy, the lags by which monetary policies affect economic activity and inflation, as well as economic and financial developments.
Freddie Mac reported last Wednesday that the average 30-year fixed mortgage rate has risen to 7%, compared to 3.14% a previous year. FFR will continue to rise and affect all Americans who want to have access to credit, mortgages, and lending rates.
Jerome Powell’s following-up speech reiterated that rate hikes were necessary to combat the country’s high inflation. Powell repeatedly stated that the Federal Reserve’s current goal of a 2% inflation rate was a lofty one.
He also stated that a slowdown of restrictive measures was ‘coming’ and said it could very possibly happen at ‘this coming meeting or next’. When reporters asked him if the Fed would pivot before December, he replied that it would.
After Powell’s news conference, stocks, precious metals and bitcoin began to lose the gains that they had seen an hour after the FOMC announcement was made. All four major stock indexes had declined by 2:55 p.m. ET. Gold was down by 0.13% and Bitcoin was up 0.6% by Wednesday afternoon.