Federal Open Market Committee Decided to Hike Key Rate by 25 BP, Blamed Elevated Inflation and Geopolitics
In line with consensus expectations, the Federal Open Market Committee (FOMC) raised the target range for the federal funds rate by 25 basis points at its meeting on March 15-16, 2022.
In line with consensus expectations, the Federal Open Market Committee (FOMC) raised the target range for the federal funds rate by 25 basis points at its meeting on March 15-16, 2022. The new target range is 25-50 bp.
The FOMC's press release stated: "Indicators of economic activity and employment have continued to strengthen. Job gains have been strong 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 cited strong job gains, a falling unemployment rate, and "elevated" inflation as its reason. The FOMC sees Russia's war on Ukraine as a key risk that may produce higher inflation and decreased economic activity. The FOMC expects to begin reducing its balance sheet at some unspecified future meeting.
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