FEBRUARY 6, 2023 – FED LIFTS RATES BY 25 BPS; SCORCHING JOBS REPORT FOLLOWS
The Fed slowed its pace of interest rate hikes by raising rates by 0.25 percent last week to a range of 4.5 to 4.75 percent (highest since 2007) as it tries to cool down the economy and slow down inflation. This was the smallest increase the Fed has instituted since March of last year. The hike is the eighth consecutive raise and comes in as inflation begins to taper down.
It was announced the US economy added 517,000 new jobs in January exceeding expectations for 189,000 and doubling the 260,000 new jobs recorded in December. The unemployment rate has now fallen to 3.4 percent, the lowest it has been since May 1969. The jobs report was released after the Fed rate announcement. Average hourly earnings grew 4.4 percent in January, year-over-year, down from 4.8 percent in December.
Based on the strong jobs report it is certain rates will continue to go up, with at least 25 basis point hikes expected at the next two meetings: March 21-22 and May 2-3.