The Federal Reserve raises interest rates again.
The Central Bank of the United States of America reinforces its aggressive approach to inflation, despite signs of an economic slowdown.
The Federal Reserve raised its key interest rate by 0.75 percentage points for the second consecutive month as it stepped up its aggressive approach to tame rising inflation despite signs that the US economy is starting to slow.
At the end of the two-day meeting, the Federal Open Market Committee raised the target range for the federal funds rate to 2.50 percent.
In a statement accompanying the announcement, the Committee said it “anticipates that continued increases in the target range will be appropriate.”
The decision, which had unanimous support, extended a string of interest rate hikes that began in March and have continued to rise steadily as the Fed intensifies its efforts to tackle inflation.
Wednesday’s rate hike signals the Fed is entering its most aggressive monetary tightening cycle since 1981. It follows a half-point hike in May and a 0.75 percentage point increase last month, the first of this magnitude since 1994.
The new target range has reached what most officials see as “a neutral rate,” which neither stimulates nor constrains growth if inflation is at the 2 percent target.
With inflation rising at the fastest pace in more than four decades, further interest rate hikes are expected throughout the second half of 2022, but the pace of those hikes is still being debated. Economists are divided on whether the central bank will implement another rate hike of 0.75 percentage points at its next meeting in September, or opt for a smaller increase of half a percentage point.