Fed raises interest rates for the first time since 2018

Yahoo Finance Live's Julie Hyman and Brian Sozzi discuss yesterday's FOMC meeting.

影片文字轉錄稿

JULIE HYMAN: As I mentioned yesterday, the Federal Reserve announced it would be raising rates for the first time since 2018, that 25 basis point or quarter point increase coming. And the Fed says six more are to come this year as it works to combat inflation.

That means the rates level would finish the year at about 1.9%. And then a target of 2.8% by the end of 2023. That's according to the so-called dot plot. At the same time, Powell also said that the Fed could finalize plans to shrink its $9 trillion balance sheet at the next meeting. That meeting, by the way, is May 3 and 4.

So some important moves here. And Chair Powell also making very clear that the Fed is prioritizing the inflation fight over the continued promotion of growth. He talked a lot about inflation, how it is hitting the middle class and even those elements, of course, that the Fed does not include in its core readings, things like gasoline and food and transportation, he talked about that in the press conference yesterday, Brian Sozzi.

BRIAN SOZZI: Right, Julie. And it is just fascinating to see this market response. I know stocks are under a little pressure here in the pre-market. But let's keep in mind, we saw a rip roaring rally yesterday that accelerated into Wednesday's close off of the statement.

And I think this comment from Evercore ISI strategist, Krishna Guha, really summarizes that market sentiment coming off of Fed day. He says, quote, "Importantly, the policy response was moderate relative to a big shift in the Fed's inflation outlook, leaving the real rate trajectory still unthreatening. That in combination with an upbeat take on growth raised hopes of a soft landing and is near-term risk friendly."

So seeing a little pullback here in the pre-market. But still, you read note after note. You talk to strategist after strategist over the past few hours. And they are breathing that collective sigh of relief, so far so good. But again, we'll see how things shape up over the week and as traders have more time to digest this news.

JULIE HYMAN: Yeah. I mean, the Fed telegraphed this. The market's been waiting for this, in terms of that first rate increase. It's just now the question of, how is the rest of it going to go? We're going to talk more about that in just a moment, but--