Fed Rate Hike – When is the Next Federal Reserve Meeting and How Much Interest Rate can be Increased?

In this post, I will be sharing details about the Fed Rate Hikes in the United States of America. You are suggested to be connected with us if you find the finance-related topic of your interest. This article will cover many interesting and important information on Fed interest rates. For the audience who does not know much about the topic, we would like to introduce what Fed Rates are.

First, let us shed some light on the functions and importance of the Federal Reserve system. The body is responsible for protecting the consumers and promoting community development. It enables the stability and safety of financial institutions, monitors the impact, and reduces systemic risks through active monitoring.

What is the Fed Rate Hike

Fed rates also known as the Federal Reserve interest rate, FOMC rate, and federal funds rate refer to the interest rate based on which credit unions and banks exchange money from each other either by lending or borrowing. Interest rates are determined by the Federal Reserve and the organization is free to modify the rates at any time. Fluctuations in the Fed Rate highly impact inflation.

Fluctuating rates also determine the monetary policies, increasing rates known to defend monetary policy. You may wonder what monetary policies are. Monetary policy refers to a set of tools that the central bank of a nation uses to control the overall supply of capital and for the promotion of economic growth. The broad range of market interest is affected by the fluctuating fed rate. The current range of the fed rate lies between 5.25 percent and 5.5 percent.

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Current Fed Rate Hike

The current fed rate does not seem to fluctuate in November month of this year i.e., 2023. The recent FOMS policy meeting did not mark any change in the Fed rate even after conducting the second meeting on October 31. As per the perception of the economists, many factors function in enforcing a pause on interest rate hikes, and cooling inflation is one of the major factors. Contrary to it, FOMC meetings held between March 2022 to July 2023, raised the interest rate 11 times. Consumer Price Index was detected to rise by 3.7% annually in September.

Fed Rate Hike - When is the Next Federal Reserve Meeting and How Much Interest Rate can be Increased?

When is the Next Fed Interest Rate Hike

The central bank can raise the rates before 2023 by using the last opportunity they have. It has been predicted by some experts that the Fed will not increase the interest rates now. As per the chief market economist, Peter Cardillo, unchanged fed rates even during the second meeting in a row suggesting that the Fed will not change the rates even in December.

Fed Rate Hikes in 2022-2023

FOMC Meeting DateFederal Funds RateRate Change (bps)
26 July, 20235.25%-5.50%+25
3 May 20235.00%-5.25%+25
22 March 20234.75%-500%+25
1 Feb 20234.50%-4.75%+25
14 Dec 20224.25%-4.50+50
2 Nov 20223.75%-4.00%+75
21 Sept 20223.00%-3.25%+75
27 July 20222.25%-2.50%+75
16 June 20221.50%-1.75%+75
5 May 20220.75%-1.00%+50
17 March 20220.25%-0.50%+25

How Much Will be Fed Interest Rate Hike

It is being anticipated by many people that in 2023, there might be one more rate hike. It is important to know that the hike in the fed rate highly depends on the national economic conditions. The foreseeable economic situation of any country helps the people predict the rate hikes within their region. Any decision regarding the Fed rates can be made public only after the next Federal Reserve meeting which is expected to be held from December 12 to December 13, 2023.

Now, you may wonder why the meeting takes two long days just to make a decision. It is because this decision is not easy to make. Many factors need to be taken into consideration while making the decision, and this decision can even impact the market rates. During the FOMC meeting, members of the Federal Reserve committee carry on discussion on every factor along with discussing the impact of every factor on the economy of the country.

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Economic impacts of hiking and lowering the Fed rates

Federal Reserve ensures the promotion of a safe and strong economy, including stable prices, employment rates, and reasonable interest rates. Federal Reserve sometimes adjusts the interest rates strategically by stimulating the economy during the recession. Interest rates are set too low by the Fed during these times.

At the time of booming of the economy, the Federal Reserve ensured to increase the interest rates. It is important to keep a check on consumers and businesses, as any compromise during the times may lead to excessive inflation within the country.

Fed uses a most crucial tool in the form of the federal funds rate. It is possible to adjust these rates in balancing economic changes like stopping prizes from getting too high, lowering the effects of recession, and preventing markets from getting crashed. One of the major intentions of the Fed is to put a high end to high inflation without disturbing the economy.

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FAQs Related to Fed Rate Hike

What happens if the Fed Rate Hikes?

Raise in the Fed Rates leads to the enhancement of the cost of credit throughout the economy.

How do the Fed Rate Hikes Affect the general population?

By making everything expensive from home to car.

By what percentage did the Fed Rate get elevated in July 2023?

These interest rates were raised to 5.25 to 5.50 % during the July 2023 meeting.

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