<p>The <a href="http://dailywire.com/topic/federal-reserve" target="_blank" rel="noopener">Federal Reserve</a> raised their target <a href="http://dailywire.com/topic/interest-rates" target="_blank" rel="noopener">federal funds</a> rate by three-quarters of a percentage point, with markets spiking as officials hinted that they could slow down the pace at which they tighten monetary policy.</p>
<p>The move comes after the central bank raised target rates in June, July, and September, meaning that the current federal funds rate is now set between 3.75% and 4%.</p>
<p>“Recent indicators point to modest growth in spending and production,” the Federal Reserve’s Board of Governors said in a <a href="https://www.federalreserve.gov/newsevents/pressreleases/monetary20221102a.htm">statement</a>. “Job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures.”</p>
<p><span style="font-weight: 400;">The Dow Jones Industrial Average rose 300 points in the immediate aftermath of the announcement, which implied a future slowdown in rate hikes by saying that officials “will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.” </span></p>
<p>The rate hike comes after the most recent inflation <a href="https://www.bls.gov/news.release/cpi.nr0.htm" target="_blank" rel="noopener">report</a> from the Bureau of Labor Statistics showed that the Consumer Price Index rose 8.2% year-over-year as of September, with the 0.4% month-to-month increase exceeding analysts’ forecasts. Despite energy costs falling in some categories, a 0.8% surge in food prices and a 0.7% increase in shelter prices contributed to the headline number.</p>
<p>Policymakers at the Federal Reserve had <a href="https://www.dailywire.com/news/federal-reserve-releases-plan-to-more-urgently-address-high-inflation" target="_blank" rel="noopener">pegged</a> a near-zero target interest rate and acquired government bonds to stimulate the economy over much of the past two years to mitigate the effects of the lockdown-induced recession. Many leading economists have more recently <a href="https://www.dailywire.com/news/elon-musk-agrees-with-a-furious-jeremy-siegel-that-fed-actions-which-blew-up-the-stock-market-make-absolutely-no-sense" target="_blank" rel="noopener">criticized</a> the central bank amid the return to a contractionary monetary regime, contending that officials who were slow in their response to rising price levels are now inflicting undue harm through their zeal to handle inflation.</p>
<p>Fallout from the rising interest rates has especially impacted the housing market as elevated mortgage rates decrease affordability. The 30-year fixed mortgage rate has remained below 3% for much of the past two years, according to <a href="https://fred.stlouisfed.org/series/MORTGAGE30US" target="_blank" rel="noopener">data</a> from government-backed mortgage company Freddie Mac. Since the beginning of the year, however, the rate has surged from just over 3% to surpass 7%, including a jump of nearly 1% in less than one month.</p>
<p>Federal Reserve officials have <a href="https://www.dailywire.com/news/top-federal-reserve-official-reveals-consequence-of-higher-interest-rates" target="_blank" rel="noopener">repeatedly warned</a> markets that economic growth will be “essentially flat” in the second half of the year following two consecutive quarters of negative growth, implying that the United States had entered a <a href="https://www.dailywire.com/news/economy-turns-positive-in-third-quarter-biden-takes-credit" target="_blank" rel="noopener">technical recession</a>.</p>
<p>“The moderation in demand due to monetary policy tightening is only partly realized so far. The transmission of tighter policy is most evident in highly interest-sensitive sectors like housing, where mortgage rates have more than doubled year to date and house price appreciation has fallen sharply over recent months and is on track to soon be flat,” Federal Reserve Vice Chair Lael Brainard commented last month during a conference in Chicago. “In other sectors, lags in transmission mean that policy actions to date will have their full effect on activity in coming quarters, and the effect on price setting may take longer. The moderation in demand should be reinforced by the concurrent rapid global tightening of monetary policy.”</p>
<p>In a similar speech delivered over the summer, Federal Reserve Chair Jerome Powell affirmed that the central bank remains committed to stable inflation. “Price stability is the responsibility of the Federal Reserve and serves as the bedrock of our economy,” he said. “Without price stability, the economy does not work for anyone. In particular, without price stability, we will not achieve a sustained period of strong labor market conditions that benefit all. The burdens of high inflation fall heaviest on those who are least able to bear them.”</p>

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Federal Reserve Hikes Interest Rates Three-Quarters Of A Point, Markets Spike As Officials Hint At New Approach