By Tom Burnett CFA
On February 1, 2023, the Federal Reserve formally raised the Fed Funds rate range by 25 basis points. The new range is 4.50-75%, the highest level since the Fed began raising rates in early 2022. The vote was unanimous among the voting members of the Open Market Committee. In its announcement press release, the Fed made it clear that the goal of 2% inflation remains in tact, leaving little doubt that future rate increases are likely. The press release noted that inflation has subsided over the past three months, but that current levels are unacceptable and will be dealt with by a continued monetary policy pressure. “Inflation remains elevated’ and the Fed has not stopped its aggressive actions to return it to the desired 2% level.
The Fed also released its Policy Statement on Longer-Run Goals which was initially published on January 24, 2012 and is periodically re-released to remind market participants of the 2% inflation goal. The Fed is leaving no doubt about its inflation fighting efforts.
The next Fed Open Market Committee meeting is scheduled for March 21-22, 2023.
Tom Burnett CFA is Director of Research