The Federal Reserve (Fed) held a regular meeting of the Federal Open Market Committee (FOMC) on the 21st (local time) and raised the key interest rate by 75 basis points (= 0.75 percentage points). As a result, the US benchmark interest rate has risen from 2.25 to 2.50% to 3.00 to 3.25%. This is the highest level in 14 years and 8 months since January 2008. As the announcement came out, the Nasdaq Composite Index and the Standard & Poor’s (S&P) 500 Index were in decline.
For the Fed, it means that it has taken the ‘giant step’ three times in a row. A big step refers to a high-intensity tightening policy where the central bank raises the benchmark interest rate by 75 basis points at a time. In the market, there was a possibility that the Fed would take a ‘higher step’ of raising interest rates by 100 basis points at a time to calm inflation, but the Fed’s decision to take a huge step was that the rate increase was causing a surge in corporate financing costs and household assets It appears that he has taken into account the fact that the risk of recession in the real economy can increase as the value decreases.
The Fed said in a FOMC statement today that protracted Russian aggression in Ukraine is putting additional upward pressure on inflation, raising concerns about a global economic slowdown. It was judged that the increase in prices of raw materials and food has not stabilized yet.
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