The US Fed raised its target interest rate by 0.75% to deal with rising inflation while forecasting a weakening economy and growing unemployment in the coming months.
- The Fed stated that the Committee decided to raise the target range for the federal funds rate to 1-1/2 to 1-3/4 percent and projects that ongoing increases in the target range will be appropriate.
- Fed officials also significantly downgraded their outlook for 2022 economic growth, now expecting just a 1.7% gain in GDP, down from 2.8% in March.
- Fed Chair Jerome Powell stated that Fed could achieve a successful outcome even if unemployment rises.
- Powell stated that if inflation drops to 2% and unemployment rise to 4.1%, that is the historically low level is a successful outcome.
Powell further stated that lower inflation is appropriate to have a healthy labor market on the basis of real wage gains and strength among all demographic groups.
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Source: US Federal Reserve