The Federal Reserve raised its interest rates by 25 basis points on Wednesday, bringing the benchmark rate to a range of 4.5% to 4.75% from 4.25% to 4.5% previously while signalling to go further in order to bring inflation down to its target.
This quarter-point hike marked the Fed’s second downshift, following a 50bps hike in December and four consecutive 75bps hikes.
The market expected three quarter-point hikes in total this year after the central bank lifted its benchmark rate to a median rate of 5.1% in 2023, equal to a range of 5.00% to 5.25% at the meeting last December.
“The Committee anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time,” wrote the Fed in a statement.
