Artemis Investment Limited – Fed raises interest rates by 0.50%, largest move since 2000

The Federal Reserve on Wednesday raised short-term interest rates by 0.50%, as part of an effort to tamp down on the inflationary pressures weighing on Americans.
HONG KONG - May 4, 2022 - PRLog -- The central bank suggested that it will further raise borrowing costs throughout this year as it attempts to undo its pandemic-era easy money policies. The policy-setting Federal Open Market Committee also detailed plans on unwinding its nearly $9 trillion balance sheet.

The decision to raise rates by 0.50% marked the most aggressive increase made in a single meeting since May 2000. Over the last two decades, the Fed has opted to raise interest rates only in increments of 0.25%, with the latest move underscoring the severity that inflation poses at the moment.

"The Committee is highly attentive to inflation risks," the FOMC said in its updated policy statement.

The Fed is now targeting interest rates in a range between 0.75% and 1.00%, with some Fed officials advocating for raising the target closer to 2.5% by the end of the year.

Fed hikes bleed through the economy in the form of higher interest rates on credit products like credit cards, mortgages, and business loans. Since the Fed's first post-COVID interest rate hike in mid-March, 30-year fixed mortgage rates have risen by a full percentage point, to over 5%.

The Fed statement noted that it is paying attention to a number of geopolitical risks, noting that COVID-related shutdowns in China are "likely to exacerbate supply chain disruptions." The FOMC said it is continuing to monitor the economic implications of the invasion of Ukraine by Russia, which may add "additional upward pressure" on inflation.

The decision was unanimously agreed to among the voting members of the committee.

About Artemis Investment Limited:

Originally established to assist expatriates access financial services in SE Asia, Artemis Investment Limited is a leading independent, boutique financial advisory firm which now caters to a global client base.

Based in Hong Kong for the last 60 years, we have adapted our services to account for the financial world in the 21st Century. We are a borderless company whose staff come from a variety of backgrounds but are united by one attribute, customer focus and objectives above all else.

We understand that many clients know where they want to be, but may not have the knowledge on how to get there. This is where our specialist expertise within the financial services sector is essential in providing the correct timing, opportunity and ultimately, the correct result to establish a lengthy and equitable relationship. This is something that our 20,000 + clients have learnt first-hand.

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Cherry Hwuang
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