Fed Raises Rates, Hints at More Tightening

Source: Federal Reserve

The Federal Reserve on Wednesday hiked its key policy rate by half a percentage point, with Federal Chairman Jerome Powell hinting at more hikes moving forward. QQQ is down 3.11%, while SPY is down 2.13%.

• The latest increase will bring the federal funds rate between 0.75% to 1% and the current market pricing rate between 2.75% to 3%.
• Powell said inflation is currently “too high,” and the Federal Reserve understands the hardships it is causing.
• The Federal Reserve is now moving “expeditiously” to bring rates back down, adding that it is “strongly committed” to restoring price stability.
• The market is now pricing in a 50-basis point rate hike moving forward, but nothing more aggressive is being anticipated.
• Powell said the committee is now actively looking at a 75-basis point increase, with three-quarters of a percentage point expected by June.
• The Fed will also see $20-billion of Treasuries and a $17.5-billion mortgage-backed securities roll-off starting June 1.