Stocks fall after Fed update
The Dow fell more than 300 points at some point after the Fed update. With the Fed raising its inflation expectations and now seeing two rate hikes in 2023, investors have decided to take risks. The Dow Jones lost around 240 points for the last time. One bright spot was banking stocks with JPMorgan and Bank of America in the green. The 10-year rate jumped about 2 basis points to 1.52% after the decision.
Fed raises inflation expectations, predicts rate hikes in 2023
The Federal Reserve expects inflation to rise in 2021 and expects rate hikes as early as 2023, the Federal Open Market Committee said after its two-day meeting on Wednesday.
However, the Fed did not say when it would cut its bond buying program. Traders will await details of this possibility at Powell’s press conference.
The central bank left its benchmark short-term borrowing rate close to zero.
– Hannah miao
Market Awaits Policy Changes, Fed Inflation Outlook
The Federal Reserve is not expected to announce any imminent changes to its asset purchases or its target interest rate on Wednesday, but the central bank’s wording and projections for future changes could move markets.
The Fed is expected to release its latest policy statement at 2 p.m. ET, along with updated economic projections. These projections will include what is known as the dot plot which shows how central bankers expect their target interest rate to change in the years to come.
How the central bank and President Jerome Powell approach inflation will also be a closely watched subject. Recent consumer and producer price readings have shown a stronger than expected increase in recent months. Powell will hold a press conference at 2:30 p.m. ET.
Shortly before the Fed’s statement announced, the Dow, S&P 500 and Nasdaq Composite were down less than 0.5%. In the bond market, the benchmark 10-year Treasury yield slipped 1 basis point to just under 1.49%.