Fed Raises Rate By Another 0.75%! What’s Happening?

Fed Raises Rate By Another 0.75%! What’s Happening?

For the fourth time this year, the US Federal Reserve raised interest rates by another 75 basis points last night.

Following this rate hike, stocks initially rose as the Fed’s statement appeared to be more dovish and expressed the hope that future rate hikes would be lower.

However, Fed Chair Jerome Powell’s still-tough talk on inflation crushed the traders’ hopes. After Powell said that inflation was still too high and the central bank will continue to raise rates, stocks tumbled. He added that it was “premature” to talk about pausing hikes and the central bank still had ways to go before wrapping up its tightening policy.

Below are key takeaways of last night’s Fed meeting summarized by our community member @mynest:

  1. “There are still some more rate hikes to go so don’t even think about Fed pausing yet.
  2. Even when the Fed pauses, they are going to hold high rates for a significant period of time.
  3. Fed rather over tighten than let inflation loose. Meaning they would rather crash the market kill inflation then try to help the market again.
  4. The level of interest rate when the hike will end is likely to exceed the inflation rate level.
  5. The pace of the hike is unimportant so a lesser % hike doesn’t mean Fed is going to loosen up.”

Although the Fed rate is unlikely to pause at near-term, we might see a lower-than-75bps rate hike in future Fed meetings, if there aren’t any “surprises” from economic data.  The next major rate hike decision will be made on 14 Dec. Here’s what to expect:

Source: Investing.com, Fed Rate Monitor Tool

In HK, they have also just increased the interest rate as well.

Meanwhile, it’s Day #4 and we’re seeing mixed trading performance from our TOP 10 in our leaderboard!

Not sure of what to trade? 

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