Thursday / September 22

Thursday / September 22

Fed raises rates

The US Federal Reserve went for its third consecutive interest-rate rise of 0.75 percentage point Wednesday. The Fed signaled additional large increases were likely at coming meetings as it combats inflation that remains near a 40-year high.

The decision was unanimously supported by the Fed’s 12-member rate-setting Federal Open Market Committee (FOMC). Benchmark federal-funds rate are now pushed to a range between 3% and 3.25%, a level last seen in early 2008.

FOMC officials’ new projections showed a majority of 19 officials who participated at the Fed’s policy meeting expect to lift the rate at least by another 1.25 percentage point by December, to a range between 4.25% and 4.5%. The Fed has two more meetings this year.

Around one third of officials expect rates to stay above 4% through 2024, and another third see the Fed cutting rates to between 2.5% and 3.5% in 2024.

The median projection showed officials expect the unemployment rate, which stood at 3.7% in August, could rise to 4.4% at the end of 2023. 

Officials projected so-called core inflation, which excludes volatile food and energy prices, at 4.5% by the end of this year, above their projections of 4.3% in June and 4.1% in March. The Fed seeks average annual inflation of 2%.

“We have both the tools we need and the resolve that it will take to restore price stability on behalf of American families and businesses,” said Fed Chairman Jerome Powell at a news conference after the decision.

“Inflation is running too hot. The committee is committed to getting to a meaningful, restrictive stance of policy and staying there until we feel confident that inflation is coming down.”

US home sales

The US housing market slowed for a seventh straight month in August, the longest stretch of declining sales since 2007.

Sales of previously owned homes dropped 0.4% in August from July to a seasonally adjusted annual rate of 4.8 million, the weakest rate since May 2020, the National Association of Realtors (NAR) said Wednesday. August sales fell 19.9% from a year earlier.

The median existing-home price rose 7.7% in August from a year earlier to $389,500, NAR said. Prices fell month-over-month for the second straight month after reaching a record high of $413,800 in June.

Home sales are about to decline further in the coming months, as mortgage rates recently topped 6% for the first time since 2008, when the US was in a recession.

The decrease in home sales is rippling through the economy. Consumers are spending less on housing-related items such as furniture and appliances, while construction of new single-family homes has also slowed.

Federal Reserve Chair Jerome Powell said the housing market will probably go through a "correction" after a period of "red hot" price increases.

New York goes after Trump

New York’s attorney general filed a civil fraud lawsuit Wednesday against former President Donald Trump, three of his adult children and his company, alleging they engaged in a decadelong scheme to falsely value their assets and generated $250 million in ill-gotten gains.

Letitia James, a Democrat and vocal critic of Trump, alleged Trump’s financial statements from 2011 to 2021 included 200 false and misleading valuations across 23 properties and assets, including residential buildings, golf clubs and the family’s Mar-a-Lago resort in Florida.

Biden's UN speech

US President Joe Biden accused his Russian counterpart on Wednesday of making "reckless" and "irresponsible" threats to use nuclear weapons and said Russia violated the core tenets of United Nations membership by invading Ukraine.

Earlier on Wednesday, Putin ordered a Russian mobilization to fight in Ukraine and made a thinly veiled threat to use nuclear weapons.

"Again, just today, President Putin has made overt nuclear threats against Europe, in a reckless disregard for the responsibilities of the nonproliferation regime," Biden said, speaking at the United Nations General Assembly in New York.

Biden claimed he didn't seek cold war across the Pacific either.

"Let me be direct about the competition between the United States and China. As we manage shifting geopolitical trends, the United States will conduct itself as a reasonable leader," Biden said.

"We do not seek conflict. We do not seek a Cold War. We do not ask any nation to choose between the United States or any other partner," he said.

US stocks

The Dow Jones Industrial Average slid 522.45 points, or 1.7%, to close at 30,183.78. The S&P 500 shed 1.71% to 3,789.93, and the Nasdaq Composite slumped 1.79% to 11,220.19.  The 2-year rate, which hit its highest level since 2007, popped up to 4.1%. The 10-year rate jumped to about 3.6% at the highs of the day.