The Federal Reserve didn’t pull any rabbit punches on the capital markets by raising interest rates another 25 basis points to a range of 2.25 to 2.50 on Wednesday. Following the decision, Federal Reserve Chairman Jerome Powell communicated that the central bank sees “growth moderating ahead.”

The stock markets’ latest declines didn’t veer the Fed off their rate-hiking path. The Dow Jones Industrial Average and S&P 500 are down 9.37 percent and 11.57 percent, respectively, in the last three months.

Meanwhile, the tech-heavy Nasdaq Composite has lost close to 14 percent within the last three months of what’s been a volatile market for U.S. equities. Nonetheless, backed by a solid economic growth and a strong labor market, the Fed forged on with hiking rates.

The markets have certainly taken a turn for the worst since September’s rate hike, and the Fed Chair did indeed recognize the change. Rather than completely ignore the latest market oscillations, Powell took these factors into account at the post-rate-hike presser, saying that “cross currents have emerged” and “financial market volatility” has increased.

Global Growth is Slowing

In fact, Powell acknowledged the global growth concerns that have been reverberating through the capital markets. With the trade war between the United States and China ongoing despite the latest tariff ceasefire, global economies are beginning to show signs of retreating.

“Growth in the economies have moderated around the world,” said Powell, as Europe and China recently released weaker economic data.

Subscribe to our free daily newsletters!
Please enter your email address to subscribe to ETF Trends' newsletters featuring latest news and educational events.