Last minute: Fed announced its interest rate decision! What happened to the Fed rate decision in February 2023, did interest rates increase?

The US Federal Reserve (Fed) announced its first interest rate decision of the year. Accordingly, the Fed Open Market Committee (FOMC) increased the policy rate by 25 basis points to the range of 4.50-4.75%. The decision was taken unanimously.

Putting the brakes on the rate of increase in line with expectations, the FOMC lastly increased interest rates by 50 basis points in December. In the previous 4 meetings, 75 basis point rate hikes were made. With the last decision, it has increased the policy rate by 450 basis points in total in the last 8 meetings.

In the text of the decision published by the FOMC, it was stated that the rate hikes that continue until the 2 percent inflation target is reached are deemed appropriate.


It was stated in the resolution text that the latest indicators point to a moderate growth in expenditure and production, and that the labor market has been strong in recent months and the unemployment rate has remained low.

It was also emphasized in the text that inflation eased somewhat but remained high.

Lastly, annual inflation in the USA fell to 6.5 percent in December, the lowest level in 14 months.


In the text of the Fed’s decision, it was stated that the ongoing war in Ukraine increased the economic uncertainties and the Board was extremely careful against inflation risks. On the other hand, unlike the text of the decision in December, today’s text did not refer to the problems experienced from the coronavirus and supply chain.


Speaking at the press conference held after the decision, Fed Chairman Jerome Powell stated that inflation continues to be well above the 2 percent targets. He said that although the latest indicators are encouraging, they need more evidence to be convinced that a downward trend in inflation has been entered.

Emphasizing that inflation is still far above its long-term targets, Powell said, “Without price stability, the economy will not benefit anyone.”

Powell added that the Fed is discussing a few more rate hike decisions to reach a sufficiently restrictive stance.

Stating that it is possible to reduce inflation to 2 percent without a major decline in the economy, the Fed Chairman said, “I expect the economy to continue to grow, but this growth will be at low levels.”


While a 25 basis point increase was predicted in the markets, it was eagerly awaited how hawkish Powell’s statements would be. When Powell’s press conference began at 10:30 pm, the Dow Jones was at 33,744 points. In the first 5 minutes of the speech, the index fell to 33,650 points due to Powell’s strict statements against inflation.

However, after the 5th minute of the speech, the markets turned upwards as the hawkish statements were not as expected. Dow Jones exceeded 34 thousand points to 22.52 to 34,088 points. Dow Jones closed the previous day at 34,086 points. Thus, the losses were erased in the 22nd minute of Powell’s statements.

While the Nasdaq 100 index was around 12,045 points at 22.35, it rose to 12,303 points at 22.52. The daily rise in the index found 1.6 percent.