Fed announces interest rate decision

The US Federal Reserve (Fed) has announced the interest rate decision that everyone has been eagerly awaiting. In line with expectations, the bank increased the federal funding rate by 50 basis points to the range of 4.25 to 4.50 percent.

Thus, the Fed slowed down by raising interest rates by 50 basis points instead of 75 basis points after four meetings. In the March-December period, the Fed has increased interest rates by 425 basis points in total.

Although the Fed raised interest rates to the highest level seen since 2007, the bank signaled that the rate hike path would continue into 2023. The Fed reiterated its view that continuing rate hikes would be appropriate.

The Fed members’ median interest rate forecast for 2023 was 5.1 percent for 2023 and 4.1 percent for 2024.

FIRST REACTION OF THE DOLLAR, GOLD AND THE EURO

Following the decision, as the dollar strengthened, gold prices fell. Gold, which was trading at $1,809 an ounce before the decision, fell to $1,800 after the decision. The gram of gold fell to 1079 TL.

The decision also boosted the dollar index, which measures the US dollar against major currencies. The dollar index, which was at 103.56 before the decision, rose above 104 after the decision, while the euro/dollar parity, which was at 1.0680, dipped to 1.0642 after the decision.