Federal Reserve Hikes by 25 Basis Points

Federal Reserve Hikes by 25 Basis Points and Softens Guidance to Combat Inflation

The Federal Reserve Hikes by 25 Basis Points increase in its policy rate to 5.00%-5.25% on Wednesday, in line with expectations. The central bank’s monetary policy committee is closely monitoring incoming information to determine if additional policy firming may be necessary to return inflation to 2% over time. However, the committee’s statement softened from its March statement, indicating a possible pause in rate hikes at its June meeting.

Over the past 15 months, the Federal Open Market Committee has raised the federal funds rate target range by 525 basis points from near zero. Analysts predict that, given the rise in core CPI inflation over the next two months, further rate hikes may be necessary in June and possibly July.

$BTC riding 50MA on daily after just testing this moving average as support in the April dip and it just printed a lower high. (Click Image for more $BTC market details)

Despite recent bank failures, all three major US stock averages rose after the announcement, with the Nasdaq up 0.4%, the S&P 500 up 0.2%, and the Dow barely in the green. The Fed noted that while economic activity expanded at a modest pace in Q1 and job gains have been robust, inflation remains elevated.

Although traders expect a pause at the June meeting, the Fed has left the window open for further rate hikes. Fed Chair Jerome Powell is set to discuss the monetary policy decision at a press conference later in the day.

In summary, the Federal Reserve has hiked its policy rate to 5.00%-5.25% in an effort to combat inflation but may pause rate hikes at its June meeting. The central bank remains attentive to inflation risks and is closely monitoring incoming information.

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