Financial Markets Wall StreetDAMIAN J. TROISE and ALEX VEIGAA bumpy day of trading on Wall Street ended with stocks broadly lower Wednesday after Federal Reserve raised its benchmark interest rate in its fight against inflation and signaled that more hikes lay ahead.by 0.50 percentage points, marking its seventh hike this year. The Fed also said it expected to raise rates higher over the coming few years than it had previously anticipated.
The Fed's latest hike is smaller than the previous four 0.75 percentage point increases and comes a day after an encouraging report showed that inflation in the U.S. slowed in November for a fifth straight month. Powell also reiterated that the Fed plans to hold rates at a level high enough to slow the economy “for some time” to ensure inflation really is crushed. He said the Fed’s projections released Wednesday do not include any for rate cuts in 2023.
The latest increase brings the Fed's federal funds rate to a range of 4.25% to 4.5%, its highest level in 15 years. Fed policymakers forecast that the cental bank's rate will reach a range of 5% to 5.25% by the end of 2023. That suggests the Fed is prepared to raise rates by an additional 0.75 percentage points next year.
Bond yields wavered for much of the afternoon as traders digested the Fed's action. The yield on the 10-year Treasury, which influences mortgage rates, slipped to 3.48% from 3.50% from late Tuesday. The two-year yield, which more closely tracks expectations for Fed moves, held steady at 4.22%.
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