Fed raises rates by 50 basis points while indicating further hikes

Following 7.1% inflation

The Federal Reserve has raised interest rates by a further 50 basis points and signaled plans to continue hiking further next year.

The decision, which was announced yesterday evening (14 December), had widely been expected by markets, following data released earlier this week that showed US inflation dropping to 7.1% in November. However, Seema Shah, chief global strategist at Principal Asset Management, said that the "promising" inflation data "does not seem to have swayed the Fed's hawkish intent at all". Looking to the future, the Fed's ‘dot plots' now predict interest rates will rise to 5.1% in 2023, up from the 4.6% that was predicted by the central bank in September. Caution surrounds 'stubbornly high'...