The Federal Reserve hiked interest rates by 50 basis points on Wednesday, following four consecutive rises of three quarter points.
Massive layoffs, pressure on the stock market, and financial misery for millions of people might all follow from this.
After four straight increases of three quarter points, the Federal Reserve raised interest rates by 50 basis points on Wednesday. Despite leaving the door open for further increases in 2023, there are many signs that the economy is slowing down enough to help lower the country's stubbornly high inflation.
Stocks dropped after the announcement, with the S&P 500 dropping close to 0.5%, despite rising earlier in the day on Wednesday.
The choice was made in response to data released on Tuesday showing inflation increased at the weakest rate since December 2021 last month, rising 7.1% on an annual basis when experts had anticipated a reading of 7.3%.
After the FOMC meeting, Fed Chair Jerome Powell stated in a press conference that the rate of rate increases is no longer as important, but he added that he is not yet prepared to claim that recent positive inflation data indicates a peak in price pressures.
"It's not as critical how fast we go," Powell said, stressing the bigger concern for policymakers now is where the Fed stops and how long it stays there.
According to the Fed's preferred metric, inflation is predicted to remain over the institution's 2% objective for at least another year, and will reach 3% by the end of 2019.
The economy could enter a recession if the Fed raises rates too quickly and at an excessively high level. Higher interest rates make borrowing more expensive and challenging for both consumers and corporations.
Millions of individuals may experience financial hardship as a result, along with massive layoffs, pressure on the stock and crypto market.
