The US Federal Reserve (Fed) increased interest rates by 75 basis points today. Thus, the boss of the dollar increased the interest rate to 3,25%. After the decision, there was fluctuation in the market. Thus, the Fed increased interest rates by 75 basis points for the third time in a row. The market expectation was for an 80 percent increase of 75 basis points. There was a 100 percent probability of an increase of 20 basis points.
The average interest rate expectation of Fed officials was 2022 percent for the end of 4,4, 2023 percent for the end of 4,6, 2024 percent for the end of 3,9 and 2025 percent for 2,9.
The decision was evaluated as a "hawk" in the market at first and the first reaction in the stock market was negative, but Fed Chairman Jerome Powell's speech was evaluated as a "dove".
The next rate decision will be announced on November 2 after the Federal Open Market Committee (FOMC) meeting. The last interest rate decision of the year will be announced on 14 December.
Powell stressed that slowing the economy to reduce inflation may hurt citizens due to rising unemployment, but delaying price stability would be more painful.
While the decision to raise rates by 75 basis points was unanimous at the FOMC, the dot chart pointed to a 4,25-10 majority in favor of a walk above 9 percent this year, showing that a fourth consecutive 75 basis point increase is possible in November.
THE MARKET HAS WALKED
After the decision and Powell's speech, the market fluctuated. While the US dollar strengthened at first, it declined slightly with Powell's speech. Euro/dollar parity started to rise again after falling to 0,9813. The 111,57-year peak was renewed with 20 in the dollar index, but then a decrease was observed.
After the decision, the 2-year US bond yield decreased after exceeding 4,11 percent.
Dollar/TL, where public control is high, showed a limited increase to 18,33 after the decision.
The ounce of gold, which was $ 1670 before the decision, rose to $ 1660 after falling below $ 1686 after the decision. Gram gold rose to 978 TL after falling to 993 TL.
After the decision, the barrel price of Brent oil also fluctuated. Oil, which first fell to $ 89, rose to $ 91 again.
In the USA, the S&P 500 index in the stock market first fell after the decision, but then started to rise.
GROWTH EXPECTATION DROPPED
The fall in the Fed's growth expectations also drew attention. While the GDP growth expectation was decreased from 2022 percent to 1,7 percent for 0,2, from 2023 percent to 1,7 percent for 1,2, and from 2024 percent to 1,9 percent for 1,7, The expectation for this was 2025 percent.
The Fed's unemployment rate expectation will increase from 2022 percent to 3,7 percent for 3,8, from 2023 percent to 3,9 percent for 4,4, and from 2024 percent to 4,1 percent for 4,4. e has been upgraded. Unemployment rate expectation for 2025 was 4,2 percent, long-term unemployment rate expectation was 4,0 percent.
THE DOLLAR HAS HIGH 20 YEARS TODAY
The US August consumer inflation was 8,3 percent on an annual basis, above expectations, and after this data, the expectation that the Fed would continue aggressive interest rate hikes increased.
Today, just before the decision, the 2-year US Treasury bond yield hit 2007 percent for the first time after 4, and the dollar index, which measures the value of the dollar against other major currencies, exceeded 111 and reached the peak of 20 years.
MESSAGES FROM THE FED PRESIDENT
The headlines in Fed Chairman Jerome Powell's statement are as follows:
* We are determined to bring inflation to our 2 percent target. Without price stability, the economy is useless for anyone.
* The US economy slowed down. There was a decrease in disposable income. The real estate sector slowed down with high mortgage rates.
* The job market remained incredibly tight. We see that the increase in employment remains strong.
* Inflation is well above our 2 percent target. The price pressures are too great. Although gasoline prices have come back a bit in recent months, they are much higher than last year. Inflation risks are on the upside. It will be necessary to continue with rate hikes.
* The rate of interest increases will continue to depend on incoming data. At some point, it will be appropriate to slow down the rate of increase in interest rates. It is highly likely that we will need a restraining policy stance for a while longer.
* We are determined to bring inflation to 2 percent. The FOMC is strongly committed to bringing inflation down, and we're going to keep raising rates until we're done. We will do everything we can to meet the Fed targets. We will continue to tighten monetary policy until we are sure we are done.
* Re-establishing price stability while achieving a soft landing will be challenging. No one knows whether the Fed policy path will lead to a recession.
* However, not bringing inflation down brings much more pain.
* The Fed does not plan to change its balance sheet plans at this time.
* The FOMC diverged for the remainder of the year to increase interest rates by 100 basis points and 125 basis points. Now we want to act aggressively and then hold the rate steady until inflation comes down.
* High interest rates, slow growth and a slackening labor market are painful for the public, but not as painful as failing to restore price stability.
* There must be a correction in the housing market that will allow a return to normal price growth.