Fed approves 0.75-point hike to take rates to highest since 2008 and hints at change in policy ahead

cnbc.com:

The Federal Reserve on Wednesday approved a fourth consecutive three-quarter point interest rate increase and signaled a potential change in how it will approach monetary policy to bring down inflation. In a well-telegraphed move that markets had been expecting for weeks, the central bank raised its short-term borrowing rate by 0.75 percentage point to a target range of 3.75%-4%, the highest level since January 2008. The move continued the most aggressive pace of monetary policy tightening since the early 1980s, the last time inflation ran this high. Along with anticipating the rate hike, markets also had been looking for language indicating that this could be the last 0.75-point, or 75 basis point, move.

The new statement hinted at that policy change, by saying the Fed «will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.»

Economists are hoping this is the much-talked about «step-down» in policy that could see a rate increase of half a point at the December meeting and then a few smaller hikes in 2023. This week's statement expanded on previous language simply declaring that «ongoing increases in the target range will be appropriate.» The new language read: «The Committee anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time.» Markets will look to Chairman Jerome Powell's news conference at 2:30 p.m. for more clarity on whether the Fed thinks it can implement less restrictive policy that would include a less dramatic level of rate hikes to achieve