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The U.S. central bank\u2019s Federal Open Market Committee (FOMC) convened on Wednesday and raised the federal funds rate by 50 basis points (bps). The 0.5 percentage point rise follows the four consecutive three-quarters of a point increases codified during the last few months. The FOMC\u2019s rate hike follows the recent U.S. inflation report which indicated that consumer prices fell to 7.1%, which was lower than expectations.<\/strong><\/p>\n Following the consumer price index (CPI) report published<\/a> on Tuesday, members of the U.S. Federal Reserve met on Wednesday and announced a 50bps rate hike. The December increase is smaller than the last four three-quarters of a point (75bps) rate increases.<\/p>\n \u201cThe committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run,\u201d the FOMC said<\/a>. \u201cIn support of these goals, the committee decided to raise the target range for the federal funds rate to 4-1\/4 to 4-1\/2 percent.\u201d The Fed is projecting an additional 75bps hike in the federal funds rate by the end of next year.<\/p>\n The news follows Tuesday\u2019s CPI data that rose less than expected as metrics show the inflation rate in November was up 7.1% from a year ago. Core CPI jumped 0.2% on the month, the U.S. Bureau of Labor Statistics (BLS) noted. \u201cOver the last 12 months, the all items index increased 7.1 percent before seasonal adjustment,\u201d the BLS CPI report details. The FOMC report notes that the Fed will continue to monitor \u201cincoming information for the economic outlook.\u201d<\/p>\n \u201c\u200b\u200bIn addition, the committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in the Plans for Reducing the Size of the Federal Reserve\u2019s Balance Sheet that were issued in May,\u201d the FOMC members disclosed. \u201cThe committee is strongly committed to returning inflation to its 2 percent objective,\u201d the FOMC added. After the rate hike and the bank signaled more increases will be enacted, equity markets and precious metal prices<\/a> tumbled.<\/p>\n Crypto prices<\/a> dropped too, and the price of bitcoin (BTC)<\/a> fell beneath the $18K zone after the FOMC statement. The Fed has codified a number of rate hikes this year with one half percentage point jump and four three-quarters of a point hikes, making it a grand total of five federal funds rate increases in 2022.<\/p>\n At the end of November, Federal Reserve chairman Jerome Powell hinted<\/a> during a speech at the Brookings Institution in Washington that easing up on the rate hikes very well could happen in December. Powell has faced political pressure<\/a> in regard to the rate hikes and Tesla\u2019s Elon Musk has warned<\/a> against the aggressive hikes in recent times.<\/p>\n \u201cWe have more work to do,\u201d Powell told reporters on Wednesday afternoon, and he further noted that \u201cinflation risks are to the upside.\u201d<\/p>\nFed Raises Federal Funds Rate by 50bps, Central Bank Expects More Increases Going Forward<\/h2>\n