US Federal Reserve raised the policy rate by 25 basis points. The Federal Open Market Committee said in the statement, “The Committee will closely monitor incoming information and assess the implications for monetary policy.”
The new range for the rate now stands at 4.75 per cent to 5 per cent.
The Committee said that it seeks to achieve maximum employment and inflation at the rate of 2 per cent over the longer run. The Committee decided to raise the target range for the federal funds rate to 4-3/4 to 5 per cent.
“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 per cent over time. In determining the extent 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 statement added.
In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans. The Committee is strongly committed to returning inflation to its 2 percent objective.”