The Federal Reserve raised interest rates as expected by one notch, sparking a surprising market turnaround with optimistic sentiment.

The Federal Reserve of the United States raised interest rates as expected early this morning, with all members agreeing to raise the interest rate range to 4.50-4.75% and indicating that they will continue to raise rates to combat inflation. The U.S. stock market opened lower, but staged a surprising turnaround after Fed Chair Powell's speech, with the S&P 500 index ultimately rising by 1.05% and the NASDAQ rising by 2%. As of 6:00 AM Taiwan time, BTC reached a recent high of 23,735, while ETH reached 1,644.

Post-Meeting Statement and Powell's Remarks

The Federal Reserve's post-meeting statement noted moderate growth in recent spending and production indicators, continued strong job growth, and a low unemployment rate. Inflation has slightly eased but remains elevated. The statement reiterated the Fed's commitment to achieving full employment and letting longer-term inflation rates reach 2%.

However, when discussing the extent of future policy decisions, the Fed indicated that it will determine the extent of the future target range adjustment based on factors such as the effects of rate hikes to date, the lagged effects of policy, financial conditions, and economic developments, rather than using the term pace as in previous statements.

In his post-meeting remarks, Powell stated:

The inflation data we have seen over the last three months show a welcome moderation in monthly growth rates. But we need more evidence to ensure that inflation is on a sustained downward path. We expect that continuing to raise interest rates will be appropriate.

During the Q&A session, Powell also emphasized the opportunity to avoid experiencing economic downturns while achieving the long-term inflation target.

Future Expectations

Although the Federal Reserve did not signal a halt to rate hikes in this meeting, according to CME FedWatch predictions, the market expects another rate hike in March followed by a pause in rate hikes, and there is even a chance of rate cuts by the end of the year.