The Federal Reserve concluded its two-day meeting Wednesday.
The rate increase comes as recent inflation readings show prices remain near 40-year highs. A historically tight jobs market in which there are nearly two openings for every unemployed worker is pushing up wages, a trend the Fed is seeking to head off as it tightens money supply.
At the same time, the Fed's preferred inflation measure showed the cost of living rose 6.2% in September from a year ago – 5.1% even excluding food and energy costs. GDP declined in both the first and second quarters, meeting a common definition of recession, though it rebounded to 2.6% in the third quarter largely because of an unusual rise in exports. At the same time, housing prices have plunged as 30-year mortgage rates have soared past 7% in recent days.
The Dow Jones Industrial Average has gained more than 13% over the past month, in part because of an earnings season that wasn't as bad as feared but also amid growing hopes for a recalibration of Fed policy. Treasury yields also have come off their highest levels since the early days of the financial crisis, though they remain elevated. The benchmark 10-year note most recently was around 4.04%.
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