U.S. Fed Holds Rates for the Fifth Straight Meeting... New York Stocks and Bond Prices Plunge [Fed Holds Rates for the Fifth Straight Meeting]

When the Federal Reserve System (Fed) once again left its benchmark interest rate unchanged, the New York Stock Exchange (NYSE) fell by the largest margin in 15 months, while long-term Treasury yields surged to pre-financial-crisis levels. As inflation concerns intensified again amid a sharp rise in global oil prices, markets questioned the Fed's resolve to fight inflation.
On the 29th (local time), the Fed held a meeting of the Federal Open Market Committee (FOMC) and kept the benchmark rate at 3.50% to 3.75% per year. It was the fifth consecutive hold this year and the second such decision since Kevin Warsh took office as chair.
In its statement, the Fed assessed that "economic activity has been expanding at a solid pace and inflation remains above the 2% target." At a press conference, Federal Reserve Chair Warsh also stressed that "there is no relaxed inflation target," adding that "the Fed's only goal is 2% price stability."
The financial markets, however, were hit by a wave of selling. On the day, the Dow Jones Industrial Average (DJIA) plunged 2.19% to close at 51,594.14, marking its biggest drop since April last year. The S&P 500 Index fell 1.52%, while the Nasdaq Index declined 1.74%.
Selling pressure in the bond market was especially strong for long-term U.S. Treasuries. The yield on 30-year U.S. Treasuries jumped to 5.21% shortly after the NYSE closed, the highest level since July 2007. Crude oil prices also fueled inflation worries. As military clashes between the United States and Iran resumed, Brent Crude Oil futures surged 7.9% to $90.74 per barrel, while West Texas Intermediate crude oil (WTI) rose 6.6% to $84.46.
[email protected] Kim Kyung-min Reporter