Fed Removes Economic Stimulus, Paves Way for More Rate Hikes

Federal Reserve Chair Kevin Warsh has described the central bank's latest rate hike as removing 'a dose of accommodation' from the economy. This means that the Fed is attempting to reduce economic stimulus and combat inflation, which remains above its long-term target.

Inflation has risen by 3.6% in the past year, exceeding the 2% target set by the Fed. Energy prices have also increased by 16.3% over the same period, with Brent crude hitting $101.15 per barrel on October 1 due to the ongoing conflict between the US and Iran.

The market is already pricing in more rate hikes, with futures implying that the Fed's benchmark rate will reach 4.6% by late 2027. However, a rapidly rising oil price could make this target seem optimistic, increasing the risk of a market downturn if the Fed raises rates faster than expected.