Fed raises interest rate target by 50bps to 0.75% to 1.00% as expected. It also announced to start the balance sheet runoff, by USD 95B as expected (USD 60B treasuries and USD 35B MBS). The decision was by unanimous vote.
The FOMC is “highly attentive to inflations risks”. The accompany statement noted that the implications of invasion of Ukraine by Russia for US economy are “highly uncertain”. ” The invasion and related events are creating additional upward pressure on inflation and are likely to weigh on economic activity.” Meanwhile, lockdowns in China are “likely to exacerbate supply chain disruptions”
Fed pledged to “adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals”.
