Fed Raises Short-Term Rates a Half Percentage Point, as Expected
Throwing its effort to slow the pace of economic growth into high gear, the Fed
decided today to raise the fed funds rate
by an aggressive half percentage point, to 6.5% from 6%. Almost every Wall Street forecaster expected the move.
and GDP
report detected higher levels of inflation. | What Rate Hikes Have Wrought Changes in major market indicators since the Fed started hiking | ||||
| Instrument | 6/29/99 | 5/15/00 | Change | Percent Change* |
| DJIA | 10,791.29 | 10807.78 | +16.49 | +0.2% |
| S&P 500 | 1351.45 | 1452.36 | +100.91 | +7.5 |
| Nasdaq | 2642.11 | 3607.65 | +965.54 | +36.5 |
| Wilshire 5000 | 12,584.00 | 13437.65 | +853.65 | +6.8 |
| Currency and Commodities | ||||
| Dollar Index | 117.89 | 120.59 | +2.70 | +2.3 |
| CRB Index | 189.37 | 219.98 | +30.61 | +16.2 |
| Oil | 18.56 | 29.95 | +11.39 | +61.4 |
| Gold | 260.50 | 275.90 | +15.40 | +5.9 |
| Treasury Yields | ||||
| 2-Year Note | 5.680% | 6.745% | +1.065 | +2.7 |
| 5-Year Note | 5.820 | 6.707 | +0.887 | +1.2 |
| 10-Year Note | 5.930 | 6.450 | +0.520 | +0.4 |
| 30-Year Bond | 6.070 | 6.155 | +0.085 | +0.9 |
| *For Treasury securities, percent change represents total return. Source: Reuters, Federal Reserve (dollar index), Merrill Lynch (Treasury total returns) | ||||
said:Increases in demand have remained in excess of even the rapid pace of productivity-driven gains in potential supply, exerting continued pressure on resources. The Committee is concerned that this disparity in the growth of demand and potential supply will continue, which could foster inflationary imbalances that would undermine the economy's outstanding performance.The fed funds rate now stands at its highest level since 1991. When this tightening cycle started, it stood at 4.75%. In addition, the FOMC said in its statement that it believes the economy remains at risk of higher inflation. This, too, was expected, and suggests that more rate hikes will follow, perhaps as soon as the FOMC's next meeting, June 27-28. The Fed also boosted the discount rate
by 50 basis points, lifting it to 6% from 5.5%.>To order reprints of this article, click here: Reprints
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| Dow Jones | S&P 500 | NASDAQ | 10-Year Note | |
|---|---|---|---|---|
| 12,801.23 | 1,342.64 | 2,903.88 | 19.69 |
Oil *
117.67
|
|
DOWN
89.23 |
DOWN
9.31 |
DOWN
23.35 |
DOWN
0.78 |
10 Yr
1.97%
SPDR Gold
167.14
|
|
-0.69%
|
-0.69%
|
-0.80%
|
-3.81%
|
Data delayed 20 minutes |

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