The Federal Reserve raised interest rates by another three-quarters of a percentage point, taking its benchmark federal funds rate to a range of 3.75% to 4% in an effort to tame high inflation, while emphasizing its willingness to assess the cumulative toll of the rate hikes on the economy.

Stocks briefly rallied, erasing moderate morning losses, before sinking to the day’s lows, with the S&P 500 index down 1.6% by 3:25 p.m. ET. Yields on the 2-year and 10-year U.S. Treasury notes fell, and the U.S. dollar weakened.

“In determining the pace of future increases in the target range, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments,” the Fed’s rate-setting panel, the Federal Open Market Committee (FOMC), said in announcing the hike. That language wasn’t in the FOMC’s statement announcing its prior rate increase on Sept. 21.

The Fed has raised rates six times this year, including increases of 75 basis points after each of the last four FOMC meetings, in an effort to curb inflation that stood at 8.2% in the year through September, based on the increase in the consumer price index (CPI). The FOMC said once again after Wednesday’s rate increase that it would keep raising rates to return inflation to its 2% target over time.

The new language makes clear inflation wouldn’t need to fall to 2% before the rate hikes slow or end, since monetary policy works with lags in terms of its effect on the economy.

The “cumulative tightening of monetary policy” mentioned by the Fed, and the lag with which it does its work, are both factors that would tend to moderate the pace of future rate hikes.

The reference to “economic and financial developments” is nominally neutral, though it may have been made with the housing and mortgage markets in mind. A record spread in yields on 30-year mortgages over the 30-year Treasury bond has made U.S. housing dramatically less affordable over the last year, slowing home sales.

By contrast, the labor market has remained strong, as the Fed noted Wednesday. Job vacancies data released a day earlier showed openings rose in September, to 1.9 per available worker.

Goods inflation hasn’t come down as much as the Fed has hoped, and in the meantime services inflation has picked up, Fed Chair Jerome Powell noted in the press conference following the rate announcement. “The inflation picture has become more and more challenging over the course of this year, without question,” he said. “That means that we have to have policy be more restrictive, and that narrows the path of a soft landing.”

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