The Fed Is Getting More Hawkish. Here's What It Means for You
The Federal Reserve has an uncanny ability to move the stock market, and the central bank demonstrated that once again after its rate decision on Wednesday.
As expected, the central bank kept the federal funds rate where it was -- at 5.25% to 5.5% -- but stocks still tumbled on the news, losing nearly 1% between 2 p.m. yesterday when the decision was announced and the close, and the broad-market index fell another 1.6% on Thursday as investors continued to react to the news.
While the Fed continued to forecast another rate hike later this year, it now sees rates falling more slowly over the next few years than it had before, indicating that rates will stay higher for longer. In its "dot plot," or the collection of economic projections of board members, which it puts out every other meeting, the median expectation is for the benchmark federal funds rate to finish 2024 at 5.1%, compared to its June forecast of 4.6%, and it expects rates to finish 2025 at 3.9%, compared to an earlier projection of 3.4%, implying it would take longer to bring inflation down to its target of 2%.
Source Fool.com
