FOMC Gradually Lifts Funds Rate
by:Tom Moeller
|in:Economy in Brief
Summary
- The FOMC raised the targeted Federal Funds Rate by 25 basis points to a range of 4.75%-5.00%.
- Today’s decision was endorsed by each member of the FOMC.
At today’s meeting of the Federal Open Market Committee, the targeted Federal Funds Rate was raised by 25 basis points to a range of 4.75%-5.00%. The increase followed a similar action at the last meeting, one 50 basis point increase at the prior meeting and four consecutive 75 basis point increases. The rate was set to the highest level since September 2007.
Following the meeting, the Fed stated, “The Committee anticipates that some additional policy firming may be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time.”
“In determining the extent of future increases in the target range, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.”
In the aftermath of recent financial market events, the statement also indicated that “The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals.”
In addition, “The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously released plans.”
Today’s action was endorsed by each member of the FOMC.
The Fed also updated its economic projections as follows:
FOMC Projections
| - | 2023 | 2024 | 2025 |
|---|---|---|---|
| Real GDP Growth (Q4/Q4) | 0.4% | 1.2% | 1.9% |
| December projection | 0.5 | 1.6 | 1.8 |
| Unemployment Rate (Q4) | 4.5 | 4.6 | 4.6 |
| December projection | 4.6 | 4.6 | 4.5 |
| PCE Inflation (Q4/Q4) | 3.3 | 2.5 | 2.1 |
| December projection | 3.1 | 2.5 | 2.1 |
| Core PCE Inflation (Q4/Q4) | 3.6 | 2.6 | 2.1 |
| December projection | 3.5 | 2.5 | 2.1 |
| Federal funds rate (range midpoint) | 5.1 | 4.3 | 3.1 |
| December projection | 5.1 | 4.1 | 3.1 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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