Fed announces three quarters percentage-point rate hike to control inflation [View all]
Source: Washington Post
The Federal Reserve on Wednesday hiked interest rates by three quarters of a percentage point, its most aggressive move yet to try to control inflation, as it squeezes the U.S. economy.
For weeks, Fed leaders set expectations for an increase of half a percentage point, as it did in May, in the latest of seven rate increases slated for this year. But a surprisingly bleak inflation report released last week, the war in Ukraine plus growing signs that the markets and American public have lost faith in the Fed, ignited a more forceful push from central bank policymakers as they wrapped up two days of meetings. The Fed has not enacted a hike of this size since 1994, but signaled similarly-large hikes are coming later this year.
“The invasion of Ukraine by Russia is causing tremendous human and economic hardship,” according to a statement released by Fed policymakers at the conclusion of the Fed's two-day policy meeting. "The invasion and related events are creating additional upward pressure on inflation and are weighing on global economic activity. In addition, covid-related lockdowns in China are likely to exacerbate supply chain disruptions.”
The Fed added that it expects “ongoing increases” of three quarters of a percentage point “will be appropriate,” though it is unclear exactly how many, or at which meetings the Fed will implement them. (Kansas City Fed President Esther George voted against the rate decision, preferring a small hike of half a percentage point.)
Read more: https://www.washingtonpost.com/us-policy/2022/06/15/fed-rate-hike-inflation/
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