Jun 16 +75%
July 27 +75%
Sep 21 +75%
Nov 2 +75%
For the moment, Fed Chair Jerome Powell has said he believes markets are handling its balance sheet rundown effectively. And on Nov. 2, the Fed said it would continue reducing its balance sheet - to the tune of about $1.1 trillion a year.
Annual inflation in September was 6.2%, according to the Fed's preferred yardstick — unchanged from the month before. The better-known consumer price index shows prices rising even faster, at an annual rate of 8.2%.
Interest rates data since 1992 and Inflation rates since 2018.
That includes the fastest deceleration in home price growth on record as mortgage rates soar to more than 7% — the highest in 20 years.
"What I'm trying to do is make sure our message is clear," Powell told reporters Wednesday. "We have some ground to cover with interest rates before we get to that level that we think is sufficiently restrictive." At the same time, Powell said the pace of rate increases may soon slow, as policymakers take stock of the effect higher borrowing costs are having on the economy.
In March 2022, the Fed switched gears. It stopped purchasing new securities and began reducing its holdings of debt in a policy known as quantitative tightening. The current balance is $8.7 trillion, two-thirds of which are Treasury securities issued by the U.S. government. The result is that there is one less buyer in the $24 trillion treasury market, one of the largest and most important markets in the world, which means less liquidity.
"Despite a rapidly cooling housing market, inflation has shown no signs of letting up, the labor market is still strong, and the economy is resilient," Greg McBride, a chief financial analyst with Bankrate, said in a statement. "This forces the Fed to continue its aggressive approach on interest rates."