The U.S. Federal Reserve has raised its benchmark interest rate another 75-basis points and
said that further increases are likely as it tries to lower inflation that currently sits at a 40-year
high of 8.2%.
The U.S. central bank said in a statement that it remains focused on bringing down inflation and
could raise interest rates to higher-than-expected levels in coming months to lower consumer
prices.
The comments sent U.S. markets sharply lower, with the Dow Jones Industrial Average closing
down more than 500 points yesterday (November 2).
Federal Reserve Chairman Jerome Powell emphasized during a news conference that the
central bank will continue to focus on inflation until it falls to its 2% target.
“We still have some ways to go, and incoming data since our last meeting suggests that the
ultimate level of interest rates will be higher than previously expected,” said Powell.
In the futures market, traders are now betting that the terminal rate for fed funds will reach
5.09% by May of next year, up from 5% previously. The terminal rate is the level at which the
U.S. Federal Reserve is expected to stop raising interest rates.
The American central bank has now raised rates six times this year, bringing its benchmark
interest rate to a target range of 3.75% to 4%.