The U.S. Federal Reserve introduced another jumbo rate hike on Wednesday, Nov. 2, 2022, by hiking the federal funds rate (FFR) by 75 basis points (bps). The American central bank said on Wednesday that the hike aims to curb inflation and the Fed says “recent indicators point to modest growth in spending and production.”
U.S. Central Bank Hikes the Federal Funds Rate by 75bps
While U.S. president Joe Biden hosted an event called the “Infrastructure Talent Pipeline Challenge,” the country’s central bank increased the FFR once again by 75bps on Wednesday. Markets had priced in and predicted the 75bps increase well before the Federal Open Market Committee (FOMC) convened.
Just before the rate hike, the White House reported that the Biden administration plans to allocate $13.5 billion to help low-income American households pay for heating this winter. This is due to the fact that red-hot inflation has contributed to U.S. consumers paying 28% more to heat their residences than they did last winter.
“Recent indicators point to modest growth in spending and production,” the FOMC announcement said on Wednesday. “Job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures,” the central bank added.
The Fed’s FOMC statement continued:
Russia’s war against Ukraine is causing tremendous human and economic hardship. The war and related events are creating additional upward pressure on inflation and are weighing on global economic activity. The Committee is highly attentive to inflation risks.
The Fed’s rate hike follows the U.S. central bank’s key inflation gauge, the personal consumption expenditures (PCE) price index report, which showed an increase of 0.5% in September. Moreover, the most recent consumer price index (CPI) report, noted U.S. consumer prices jumped 8.2% in September.
Stocks, Bitcoin, and Precious Metals Rise on the Possibility of a Fed Pivot
Stocks jumped ahead after the Fed announced the 75bps raise and bitcoin (BTC) also jumped 1% in the last hour following the announcement. The price of gold, per troy ounce, jumped 0.98% higher, while the price of one ounce of fine silver increased by 1.58% over the $20 per ounce region.
Markets rebounded as the Fed’s announcement hinted at a possible pivot. “The committee will take into account…
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