Dow rebounds after Federal Reserve excludes larger rate hikes

Shares rebounded on Wednesday after the Federal Reserve raised interest rates by 0.5 percentage points, but were excluded from further increases in the future.

The Fed is in a tough fight against inflation. Delivery on wednesday The biggest rate hike in over 20 years.

But investors are relieved after Fed Chair Jerome Powell says policymakers aren’t considering raising rates more than 0.5 percentage points at a time, even if the Fed says it will continue to raise interest rates. bottom.

Concerns that the Fed will shake a particularly aggressive market last week and stock prices will fall sharply.

“The increase in 75 basis points is not something the Commission is actively considering,” Powell told reporters when asked if the Fed would consider increasing it by three-quarters percentage points. rice field.

The Dow rose more than 900 points and the S & P 500 rose almost 3%, both of the highest days since 2020.

Still, the Fed has revealed that the fight against inflation remains a top priority, even after consumer prices have soared the most in 40 years.

Powell and his colleagues said they would actively consider raising the halving rate two more times at the next two meetings in June and July.

Uncertain future of the economy

It’s not just inflation. The Fed faces great economic uncertainty, from the war in Ukraine to China’s continued crackdown after the outbreak of COVID.

In a note to investors, Bank of America Global Research clearly stated that the central bank intends to fight aggressive inflation, but at least “may have been in an amazing market for some time.” Is expensive. “

Markets may continue to be concerned that the Fed could over-raise rates and turn into a recession.

However, Powell said he was optimistic that central banks could curb inflation without stagnating economic growth.

“We think we have a good chance of a soft or soft landing,” Powell said Wednesday.

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Dow rebounds after Federal Reserve excludes larger rate hikes

Source link Dow rebounds after Federal Reserve excludes larger rate hikes

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