As expected, the recent two-day FOMC meeting that began on January 31st and ended yesterday, February 1st, yielded yet another, albeit gentler, rise in the interest rate in a continued effort to bring inflation down.

The interest rate was raised by 25bps this time around, taking the range to 4.50-4.75%, a mild increase compared to the last raise of 50bps in December. 

The FED policies and interest rate hikes have been successful so far in bringing down inflation in the U.S, with FED Chair Jerome Powell stating that a further increase in target range could help achieve the 2% inflation goal, indicating the possibility of raising interest rates by 75bps through 2023.

The FED also confirmed that it would continue to allow up to $60 billion in Treasury securities and $35 billion in agency mortgage-backed securities (MBS) to mature and roll off its more than $8.5 trillion balance sheet every month, another key component of its ongoing battle against inflation.

As a result, U.S. Markets were trading mix but relatively stable around the time of the announcements. NASDAQ Composite was up 1.50%, while the S&P 500 was higher by 0.77%. DOW 30 bounced back from an early loss to trade flat at 34,08120.

During the press conference following the FOMC meeting, Mr. Powell stated: “Recent indicators point to modest growth in spending and production. Job gains have been robust in recent months, and the unemployment rate has remained low. Inflation has eased somewhat but remains elevated…”

The next FED meeting is scheduled to take place between the 21st and 22nd of March, where, as alluded before, a further, but likely smaller, rise in inflation rates is expected.

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