The Federal Reserve raised its benchmark interest rate by half a percentage point, the most aggressive move yet to contain soaring inflation.
- Jerome Powell, the Fed Chair, stated that inflation is much too high, and the Fed was focused on moving expeditiously to bring it down.
- The federal funds rate usually sets the rate on how banks charge for short-term lending but also is linked to a wide range of adjustable-rate consumer debt.
- The central bank stated it would start reducing asset holdings on its $9 trillion balance sheet. The Fed had been purchasing bonds to maintain interest rates low.
- The latest rate hike will push the federal funds rate to a range of 0.75%-1%, and current market projections expect rates to rise to around 2.75%-3% by the end of 2022.
Markets expect the Fed to continue hiking rates aggressively in the coming months.
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Source: US Federal Reserve