US Fed Hikes Interest Rate By 75bps, Stock Markets Reacted Positively As Anticipated

The US Federal Reserve announced a 75 bps interest rate hike today, for the three straight seasons in a row. The Us central bank also indicated 'additional large increases were likely at upcoming meetings, as Fed officials are trying to combat the mounting inflation rate. Today's decision has been unanimously supported by the US Fed's 12-member committee. It is set to raise its benchmark federal-funds rate to a range between 3% and 3.25%, which was last seen in early 2008.

Both the commodity and stock markets have reacted positively. S&P 500 was down by 0.91%, stood at 3,891.21, and Nasdaq Composite up by 1.07%, stood at 11,547.53, at the time of writing. Comex gold futures quoted at US$ 1,674/oz, up by 0.29%, while Comex silver futures quoted at US$ 19.55, up sharply by 1.91%.

Wall Street was expecting a rate hike from the Fed and absorbs the decision. However, if the Fed would have hiked the rate above 75 bps, the markets could have gone into turmoil.

On the other hand, today, Vladimir Putin announced a mobilization of Russian reservists. Putin has also threatened a nuclear response to the war in Ukraine. Hence oil prices fell sharply, while gasoline demand slipped. It helped the US Dollar index to gain to a 20 years high level at 111.58.

A Wall Street Journal report mentioned, "Officials' new projections showed a majority of 19 officials who participated at the Fed's policy meeting expect to lift the rate at least by another 1.25% point by December, to a range between 4.25% and 4.5%. The Fed has two more meetings this year."