Fed Lifts Interest Rates and Will Wind Down $9 Trillion Balance Sheet Assets to Tackle High U.S. inflation
The Federal Reserve on Wednesday raised a key interest rate by a half point and reaffirmed a more aggressive strategy to try to subdue the worst outbreak of U.S. inflation in 40 years.
The Federal Reserve on Wednesday raised a key interest rate by a half point and reaffirmed a more aggressive strategy to try to subdue the worst outbreak of U.S. inflation in 40 years. As part of a two-pronged fight against inflation, the central bank also said it plans to whittle down its $9 trillion stockpile of Treasury bonds and mortgage-backed securities starting on June 1.
It’s the second rate hike this year and the biggest since 2000. Powell also said further 1/2-point rate increases are on the table at upcoming meetings.
“Inflation is much too high and we understand the hardship it is causing,” said Fed Chairman Jerome Powell in what he called a direct message to the American public. “We are moving expeditiously to bring it back down.”
The U.S. central bank as expected lifts its benchmark fed funds rate to a range of 0.75% to 1% in what’s expected to be a series of increases. The vote was unanimous.
India, Second-Largest Wheat Producer, Bans Exports amid Food Supply Concerns
India, the second-largest producer of wheat, has banned exports of the commodity, due to a risk to its food security.
Shares Churn, Close Down; Yields Fall after U.S. Inflation Data
Wall Street stocks closed sharply lower and Treasury yields fell in Wednesday's volatile session as oil prices rallied and investors worried about the potential for an economic slowdown.
Billions in Wrong-Way ETF Bets Placed Just Before Thursday Rout
According to Bloomberg, in the three days through Wednesday last week before market crash on Fed policy statements began, investors infused $426 million to the ProShares UltraPro QQQ ETF (ticker TQQQ), a leveraged product that delivers three-times the return of the Nasdaq 100 Index.
