Breaking: Fed hikes policy rate by 25 bps to 4.5-4.75% as expected

The US Federal Reserve on Wednesday announced that it raised the policy rate, federal funds rate, by 25 basis points to the range of 4.5-4.75% following the first policy meeting of 2023. This decision came in line with the market expectation.

Follow our live coverage of the Fed's policy announcements and the market reaction.

In the policy statement, the Fed noted that 'ongoing increases' in rates will be appropriate and added that inflation remains elevated despite having eased somewhat.

Market reaction

The US Dollar Index edged slightly higher with the immediate reaction but quickly erased its gains as investors await FOMC Chairman Jerome Powell's press conference. As of writing, the index was down 0.26% on the day at 101.82.

Key takeaways from policy statement, via Reuters

"In determining the extent of future rate hikes, will take into account cumulative tightening, policy lags, and economic and financial developments."

"Recent indicators point to modest growth in spending and production."

"Job gains have been robust in recent months, unemployment rate has remained low."

"Russia's war against Ukraine is contributing to elevated global uncertainty, Fed remains highly attentive to inflation risks."

"Will continue reducing the balance sheet as planned."

"Vote in favor of policy was unanimous."