Fed hikes interest rate by 25 basis points as expected

The US Fed announced on Wednesday that it raised the policy rate, federal funds rate, by 25 basis points to the range of 4.75-5% following the March policy meeting. This decision came in line with the market expectation.

Summary of Economic Projections, known as the dot plot, will shape how the markets react to FOMC decision.

The market positioning suggests that such a decision is already largely priced in, opening the door for a significant reaction to the Fed’s communication, the revised Summary of Economic Projections (SEP) and Chairman Jerome Powell’s press conference regarding future policy actions.

Investors across the globe were eagerly awaiting the key rate decision by US policymakers, as major central bankers remain committed to fighting red-hot inflation without damaging economic growth amid fears of at least a mild recession.

Today’s Fed decision comes in the middle of a turmoil in banking stocks thanks to the Credit Suisse and Silicon Valley Bank (SVB) crises that sent wild signals to global stock markets.