Fed Goes Big Again With Third-Straight Three-Quarter-Point Rate Hike | CNN Business

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After making history by approving a third consecutive 75-basis-point hike, Federal Reserve Chairman Jerome Powell held a press conference on the plan to get inflation down to 2%.

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Federal Reserve Board Chair Jerome Powell speaks during a news conference following a two-day meeting of the Federal Open Market Committee (FOMC) in Washington, U.S., July 27, 2022.

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It’s no secret the market is in turmoil right now with some fearing equities are headed for new lows. David Bailin, chief investment officer at Citi Global Wealth Investments, gives three pieces of advice for smart investors.

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Home prices remain high despite record inflation and high mortgage rates. Danielle Hale, chief economist at realtor.com, explains what home sellers can expect going forward and how buyers might be able to get a lower price.

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MIAMI, FLORIDA - JUNE 21: A 'for sale' sign hangs in front of a home on June 21, 2022 in Miami, Florida. (Photo by Joe Raedle/Getty Images)

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CNN’s Chief Business Correspondent Christine Romans explains what corporate America can tell us about the health of the US economy going forward.

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DULLES, VA - MAY 25: Pallets of baby formula are unloaded from a FedEx cargo plane upon arrival at Dulles International Airport on May 25, 2022 in Dulles, Virginia. More than 100 pallets of infant formula traveled from Ramstein Air Base in Germany to Washington Dulles International Airport. The mission is being executed to address an infant formula shortage caused by the closure of the largest U.S. formula manufacturing plant due to safety and contamination issues. (Photo by Drew Angerer/Getty Images)

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Can the Twitter whistleblower save Elon Musk from buying Twitter for $44B? Dan Ives, senior director at Wedbush Securities, explains 4 possible scenarios for how Twitter and Musk’s legal battle could play out in court.

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David Rubenstein, author of “How to Invest: Masters on the Craft” tells CNN’s Matt Egan how the best investors approach their portfolios during times of volatility.

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David Rubenstein, author of

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B. Riley Financial’s Chief Market Strategist Art Hogan tells CNN’s Alison Kosik that a recession in 2023 is likely, but it’s still possible for the Federal Reserve to pull off a “soft landing.”

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Klarna CEO Sebastian Siemiatkowski tells CNN’s Alison Kosik how the company is responding to a slashed valuation and why Apple entering the market is confirmation “buy now, pay later” is a good business.

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The stock market’s summer rally has run into trouble recently. Despite the rumbles, Anastasia Amoroso, Chief Investment Strategist at iCapital, explains why long-term investors should buy stocks especially when the market feels terrible.

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Subway sandwiches could soon be on your list of monthly subscription services. Subway CEO John Chidsey explains to CNN’s Alison Kosik how the subscription program will work and what consumers can expect from food prices.

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Cowen’s Senior Retail Analyst Oliver Chen breaks down why Walmart beat quarterly earnings expectations whereas Target missed.

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Inflation may be slowing, but Dana Peterson, Chief Economist at The Conference Board, says the Federal Reserve may still raise rates aggressively. Here’s why.

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During the pandemic, Netflix’s stock skyrocketed off of superb subscriber growth. Now that the market cap has fallen along with subscriptions, is Wall Street to blame for never quite understanding what it was investing in?

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This picture taken on September 11, 2014 shows the on-demand internet streaming media provider, Netflix, on a laptop screen in Stockholm. The online streaming website Netflix will be launched in Germany, Austria, Switzerland, Belgium and Luxembourg mid-September. It is already operating in Scandinavian countries. AFP PHOTO/JONATHAN NACKSTRAND        (Photo credit should read JONATHAN NACKSTRAND/AFP via Getty Images)

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Rick Rieder, BlackRock’s Chief Investment Officer of Global Fixed Income, gives his predictions on how the Federal Reserve will approach interest rates in coming months.

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Washington, DC CNN Business  — 

The Federal Reserve made history on Wednesday, approving a third consecutive 75-basis-point hike in an aggressive move to tackle the white-hot inflation that has been plaguing the US economy.

The supersized hike, which was unfathomable by markets just months ago, takes the central bank’s benchmark lending rate to a new target range of 3%-3.25%. That’s the highest the fed funds rate has been since the global financial crisis in 2008.

Wednesday’s decision marks the Fed’s toughest policy move since the 1980s to fight inflation. It will also likely cause economic pain for millions of American businesses and households by pushing up the cost of borrowing for things like homes, cars, and credit cards.

Federal Reserve Chairman Jerome Powell acknowledged the economic pain this rapid tightening regime may cause.

“No one knows whether this process will lead to a recession or, if so, how significant that recession would be,” Powell said Wednesday afternoon in a press conference following the central bank’s policy announcement, which came after a two-day monetary policymaking meeting.

The Fed’s updated Summary of Economic Projections, released Wednesday, reflects that pain: The quarterly report showed a less optimistic outlook for economic growth and the labor market, with the median unemployment rate inching up to 4.4% in 2023, higher than the 3.9% Fed officials projected in June and substantially higher than the current rate of 3.7%.

US gross domestic product, the main measure of economic output, was revised down to 0.2% from 1.7% in June. That’s well below analysts’ estimates: Bank of America economists had estimated that GDP would be revised to 0.7%.

02:18 – Source: CNN

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Inflation projections also grew. Core Personal Consumption Expenditures, the Fed’s favored measure of rising prices, is projected to hit 4.5% this year and 3.1% in 2023, the Fed’s SEP showed. That’s up from June projections of 4.3% and 2.7%, respectively.

Perhaps most important to investors seeking forward guidance from the Fed is the projection of the federal funds rate, which outlines what officials think is the appropriate policy path for rate hikes going forward. The numbers released on Wednesday showed that the Federal Reserve expects interest rates to remain elevated for years to come.

The median federal funds rate projection was revised upwards for 2022 to 4.4% from 3.4% in June. That number rises to 4.6% from 3.8% for 2023. The rate was also revised higher for 2024 to 3.9% from 3.4% in June and is expected to remain elevated at 2.9% in 2025.

Overall, the new projections show the growing risk of a hard landing, where monetary policy tightens to the point of triggering a recession. They also provide some proof that the Fed is willing to accept “pain” in economic conditions in order to bring down persistent inflation.

The higher prices mean that consumers are spending around $460 more per month on groceries than they were this time last year, according to Moody’s Analytics. Still, the job market remains strong, as does consumer spending. Housing prices remain high in many areas, even though there has been a substantial spike in mortgage rates. That means the Fed may feel that the economy can swallow more aggressive rate hikes.

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