NEW YORK: Wall Street stocks tumbled and the dollar rallied Wednesday after the Federal Reserve announced another large interest rate increase and signalled it expects more monetary tightening ahead to fight inflation.
Equities gyrated after the Fed press release before taking a final decisive push lower during Fed Chair Jerome Powell's news conference. The S&P 500 ended down 1.7 per cent. The latest Fed statement included interest rate projections for the end of 2023 and 2024 that are higher than the previous forecasts, signalling the US central bank now sees the need for a more prolonged monetary tightening cycle in light of inflation trends.He acknowledged that bringing inflation down will require a period of slower growth and higher unemployment, noting that the job market is out of sync, with far more openings than workers.
"Higher rates will cause pain to households and businesses, with the jobs market being closely watched for signs of redundancies and hiring freezes.""Once again, the Fed's hawkish rate guidance kept the dollar biased higher as it distinguishes America's central bank from its less aggressive counterparts abroad," said Convera's Joseph Manimbo.