All eyes on Wall Street were watching the Federal Reserve today as the central bank wrapped up its Federal Open Market Committee (FOMC) meetings for the month. So what did the Federal Reserve do today? And what was the Fed interest rate decision for March 2022?
Importantly, as the Fed works to fight inflation in the United States, the central bank announced its first interest rate hike since 2018. The first hike will raise its federal funds rate to a range between 0.25% and 0.5%. The target rate had previously been at near-zero levels.
Investors are also paying close attention to the timeline the Fed set during its press conference today. This lays out what interest rate hikes are likely coming for the rest of 2022.
Specifically, as the Wall Street Journal reports, projections currently call for the Fed to raise the target rate to 1.875% by the end of 2022. They also call for the rate to hit 2.75% by the end of 2023. To get there, the central bank would have to implement seven more hikes of 0.25% in 2022, as well as a few more hikes in 2023.
Investors were also looking for further Fed commentary on inflation. The official central bank statement acknowledged rising prices, attributing some of the increases to Russia’s ongoing invasion of Ukraine.
Fed Interest Rate Decision March 2022
So how is the stock market reacting to the Fed interest rate decision?
Major indices including the S&P 500 and the Nasdaq Composite are still in the green for the day, although they have trimmed their gains from this morning. It seems that investors are also considering an updated look at retail sales, which shows a pullback in consumer spending. One conclusion is that rising prices are already impacting discretionary shopping decisions.
Investors will likely keep an eye on the rate hike news for the rest of the day and into the future. With projections for several more rate hikes in 2022, this will remain a hot topic this year.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Sarah Smith is the Editor of Today’s Market with InvestorPlace.com.