The Fed raised its interest rates by 25 basis points at the first Federal Open Market Committee (FOMC) meeting of 2023, bringing the federal funds rate to a target range of 4.5% to 4.75%. While Fed Chairman Jerome Powell acknowledged that the “disinflationary process” has begun, he warned that continued rate hikes would be appropriate.
Furthermore, Powell cautioned about better-than-expected economic data. The January U.S. jobs data showed that nonfarm payrolls grew by 517,000 jobs, nearly triple the Wall Street estimate. Such a robust employment report might bolster the Fed’s determination to raise interest rates above 5% and keep them high for the remainder of the year.
