The Fed hikes rates by 25 basis points, the most since 2006

Wall Street rallied after the Federal Reserve announced it would hike key interest rates by 25 basis points, signaling a possible pause in monetary policy tightening. The Nasdaq gained 0.89% to 12,187.71 points, the S&P 500 0.51% to 4,140.51 points and the Dow Jones 0.23% to 33,762.78 points. Wall Street is hoping this is the latest hike, and the Fed may have hinted at that possibility in its statement. The economy has already slowed down and the US banking system has begun to buckle under the weight of much higher rates. “The conditions (of the banks, ed.) have improved”, and “the system is strong and resilient”, however “we have to face rules to make the banking system more resilient and we are sure that we will”. Fed Chairman Jerome Powell said this during the press conference. The Fed reads the bulletin “will closely monitor incoming information and evaluate the implications for monetary policy”. However, the US central bank remains “strongly committed to bringing inflation back to the 2% target”. The Fed will also continue to reduce its holdings as outlined in previously announced plans.