Watch Fed Chair Powell discuss the central bank’s biggest rate hike in nearly three decades

The FOMC’s policy statement today runs 368 words, and only mentions “Ukraine,” “supply chain” and “Covid” one time each. “Inflation” was cited seven times.

–Scott Schnipper

The Fed stressed its dedication to bringing down soaring inflation in its post-meeting statement.

“The Committee is strongly committed to returning inflation to its 2 percent objective,” the Federal Open Market Committee said in the statement.

The rate-setting committee removed a long-used phrase indicating that the FOMC “expects inflation to return to its 2 percent objective and the labor market to remain strong.”

— Yun Li

Click here for a comparison of Wednesday’s Federal Open Market Committee statement with the one issued after the central bank’s previous policymaking meeting on May 4.

— Yun Li, Jesse Pound

The Federal Reserve announced that it raised interest rates by 75 basis points or 0.75 percentage point. This marks the greatest rate increase in 28 years.

The Federal Reserve announced that it raised interest rates by 75 basis points or 0.75 percentage point. This marks the greatest rate increase in 28 years, and it brings the benchmark funds rate to a range of 1.5% to 1.75%.

Individual members of the Fed expect the benchmark rate will end 2022 at 3.4%, 1.5 percentage points higher than the March estimate.

Fed officials also cut their outlook for 2022’s economic growth. They now predict a 1.7% gain in GDP, down from 2.8% in March.

Read more here.

The S&P 500 historically gains an average 23.8 basis points following the conclusion of a Federal Reserve policy meeting when the broad-market index is already up by 100 basis points by noon, according to data from Bespoke. One basis point is equal to 0.01%.

This is compared to an average 5.1 basis point gain for all Fed meeting days.

— Sarah Min

The Federal Reserve’s interest rate announcement is a few minutes away. Here’s a snapshot of where the markets stand.

U.S. stocks: The S&P 500 is up 1.1%, and the Nasdaq Composite has gained 1.8%. The Dow Jones Industrial Average has added more than 200 points.

Bonds: The 10-year Treasury yield is at 3.398%, down about 8 basis points. One basis point is equal to 0.01%.

Gold: Gold futures are trading at $1,822.0 an ounce, up about 0.4%.

Currencies: The dollar index is at 105.34, down about 0.1%. The euro is down about 0.1%, at 1.0403 per dollar.

–Darla Mercado

Pershing Square’s Bill Ackman is calling on the Federal Reserve to act aggressively so the central bank can regain credibility in its fight against soaring inflation.

On Wednesday before the Fed decision at 2 p.m. ET, Ackman gave his prediction in a tweet, anticipating that the Fed “raises 75 bps, expresses a high level of concern about inflation and inflationary expectations, and makes clear that nothing is off the table for July including 100 bps or more if necessary.”

The hedge fund manager also said a series of one percentage point increment hikes would be more efficient to ease inflation and the markets can recover sooner.

— Yun Li

A real-time reading of economic growth from the Atlanta Federal Reserve has declined again on Wednesday, reflecting the slowing U.S. economy and fanning fears of a potential recession.

After a weaker-than-expected retail sales report for May, the GDPNow tracker now shows 0% growth for the second quarter.

If that comes to pass, this will mark the second straight quarter with flat or negative GDP growth. In the first quarter, GDP growth was negative, though largely due to a higher-than-usual difference between imports and exports.

With inflation running at its highest level since the early 1980s, the Federal Reserve is raising rates despite slowing economic growth. That dynamic has led many on Wall Street to predict a recession either later this year or in 2023.

Consecutive quarterly declines in GDP often coincide with official recessions, though that standard is not part of the official definition used by the National Bureau of Economic Research.

— Jesse Pound

The Federal Reserve is expected to raise interest rates by three-quarters of a percentage point – a move the central bank hasn’t made since 1994. The move would raise the federal funds rate to a range of 1.5% to 1.75%.

Central bank officials are also expected to reveal their outlook for interest rates through its “dot plot” of individual members’ expectations. The Fed will also update its expectations for gross domestic product, inflation and unemployment.

The Fed’s rate announcement comes at a time when inflation is running at its highest pace since December 1981.

Read more here.

–Darla Mercado, Jeff Cox