Wall Street declines after the Fed’s ambiguous interest rate decision

After the Federal Reserve held interest rates constant on Wednesday but made clear it anticipates more hikes in 2023, Wall Street markets fell.

As was to be anticipated, the US central bank decided to maintain its benchmark lending rate between 5.0 percent and 5.25 percent. But policymakers’ predictions showed that there would be solid support for two further increases in 2023.

The Dow Jones Industrial Average was down 1.1 percent at 33,846.54 as of 1835 GMT.

While the tech-heavy Nasdaq Composite Index dropped 0.3 percent, falling to 13,533.64, the broad-based S&P 500 fell by 0.4 percent to 4,352.74.

The Fed’s decision on Wednesday ended a run of 10 consecutive meetings during which it raised interest rates in response to high inflation.

However, recent statistics indicate that inflation has moderated.

Consumer price inflation increased by 4.0 percent from a year earlier in May, less than half of a recent record level but still significantly more than the Federal Reserve’s two percent objective.

Wednesday’s decision was referred to in a report from High Frequency Economics as a “hawkish pause.”

“Net, no surprises on rates at today’s (Fed) meeting,” the letter said. However, new predictions show that the cycle of rate hikes is not over even if there is no change in policy today.