US hikes rates by 25 bps, key highlights from Fed statement

The US central bank also released economic forecasts. Here are the key highlights from the US Fed statement:

– US Fed raises interest rates by 25 bps to 4.9 percent, effective March 23, 2023, as it continues fight against inflation

– The Federal Open Market Committee (FOMC) decided to raise the target range for the federal funds rate to 4-3/4 to 5 percent

Catch live updates on US Fed policy here

– The US banking system is sound and resilient: Fed statement

– Reasons for the hike: “Job gains have picked up in recent months and are running at a robust pace; the unemployment rate has remained low. Inflation remains elevated,” said the statement.

– Recent developments are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring, and inflation. The extent of these effects is uncertain.

– The Committee anticipates that some additional policy firming may be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time.

– In assessing need for further rate hikes will particularly be focused on actual, expected effects of credit tightening

– Change in language in Fed statement: A shift has been seen away from “ongoing increases” to the policy rate to “some additional firming”.

– Officials still project the fed funds rate will end 2023 at 5.1%