Fed Raises Rates By 25 Bps

Vladimir Zernov
Updated: Feb 1, 2023, 20:51 GMT+00:00

The Fed signaled that it would continue to raise rates to fight inflation. Trading action is choppy, and market participants are waiting for Jerome Powell's press conference.


In this article:

Key Insights

  • The Fed raised the interest rate from 4.5% to 4.75%. 
  • The central bank said that it remained “highly attentive” to inflation risks. 
  • The Fed signaled that it would continue to raise rates. 

Fed’s Rate Hike Meets Analyst Consensus

The Fed has just released its Interest Rate Decision. The central bank decided to raise the interest rate by 25 bps, in line with the analyst consensus.

The Fed noted that recent indicators pointed to modest growth in spending in production, while job gains remained robust in recent months. The Fed remains “highly attentive” to inflation risks.

Importantly, the Fed noted that “ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time.”

Put simply, the Fed confirmed that it was ready to push the interest rate from the current level at 4.75% to the 5.00% at the next meeting.

Traders should note that Jerome Powell’s press conference starts soon, and it will have a significant impact on markets dynamics.

U.S. Dollar Tries To Rebound After Fed Decision

S&P 500 trading action was choppy after the release of the Fed decision. It looks that traders hoped that Fed will be less hawkish.

U.S. dollar moved away from session lows as the Fed signaled that it would continue to raise rates. It will be interesting to see whether there is enough fuel for a short squeeze as the U.S. dollar is trading near multi-month lows.

Gold moved lower as dollar rebounded. Treasury yields have also started to move higher, which was bearish for gold and other precious metals.

Traders should note that first reaction to the Fed decision is not always sustainable. Market sentiment may change quickly during the press conference, so traders should be prepared for fast moves.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

Vladimir is an independent trader and analyst with over 10 years of experience in the financial markets. He is a specialist in stocks, futures, Forex, indices, and commodities areas using long-term positional trading and swing trading.

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