Fed rate hike continues – another 75-basis point
Market Reaction:
Major US market indices rose FOMC Meeting
November 3, 2022
On November 2, the Federal Open Market Committee (FOMC) concluded its meeting by raising the federal fund rate by 75 basis point (bps), to a range of 3.75% to 4%. Federal Reserve has now raised interest rates in the 4th consecutive meetings and has lifted the rate overall 6 times this year alone.
Inflation is driving the Fed’s aggressive monetary policy this year. Even as the Fed has continued to raise interest rates, prices have upon the release of the Fed’s statement, which promised to take economic risks more fully into account when determining the magnitude of any future rate rises, but those gains were lost after Powell spoke, and the day ended considerably lower. The S&P 500 index fell 2.5% and Nasdaq slid more than 3%.
Yield on US treasury securities, which dropped sharply after the Fed statement was released, turned higher and 2-year note – the bond maturity was up 6 basis point to about 4.61%.
According to CME Group FedWatch tool market, observers see more of hawkish future, which shows 50% chances rate are at range between 4.75%-5% come February 2023.