FOMC Lifts Funds Rate Target by Half Point as Expected
by:Tom Moeller
|in:Economy in Brief
At today's meeting of the Federal Open Market Committee (FOMC), the Fed announced that it will raise the target for the Federal funds rate to a range of 0.75% - 1.00% from 0.25% - 0.50%. It placed the rate at the highest level since March 2020. The move was as expected in the Action Economics Forecast Survey.
The Fed also "anticipates that ongoing increases in the target range will be appropriate."
The statement indicated that, "Although overall economic activity edged down in the first quarter, household spending and business fixed investment remained strong. Job gains have been robust in recent months, and the unemployment rate has declined substantially. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures."
It also stated, "The invasion of Ukraine by Russia is causing tremendous human and economic hardship. The implications for the U.S. economy are highly uncertain. The invasion and related events are creating additional upward pressure on inflation and are likely to weigh on economic activity. In addition, COVID-related lockdowns in China are likely to exacerbate supply chain disruptions. The Committee is highly attentive to inflation risks."
In addition, the Fed will begin reducing its $9 trillion portfolio of Treasury securities and agency debt and agency mortgage-backed securities on June 1.
Today's action was endorsed by each member of the FOMC.
The statement issued following today's meeting can be found here.
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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