Alexa US Federal Reserve introduces biggest rate hike since 1994
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US Federal Reserve introduces biggest rate hike since 1994


Banking And Finance

US Federal Reserve introduces biggest rate hike since 1994

The US Federal Reserve approved its most significant interest rate increase in over 25 years to stop a surge in inflation that US central bank officials acknowledged may be eroding public trust in their power.

The widely anticipated move raised the target federal funds rate by three-quarters of a percentage point to between 1.5% and 1.75%, still comparatively low by historical standards.

But the Federal Reserve’s hawkish commitment to controlling has already touched off a broad tightening of credit conditions being felt in US stock and housing markets and is likely to slow demand throughout the economy—the Federal reserve’s intent.

The Federal officials also envision steady rate increases through the rest of this year, perhaps including additional 75-basis-point hikes, with a federal funds rate at 3.4% at year’s end. That would be the highest level since January 2008 and enough, the Federal Reserve’s projections show, to slow the economy markedly in coming months and lead to a rise in unemployment.

Even with the more aggressive interest rate measures taken, policymakers view inflation as measured by the personal consumption expenditures price index at 5.2% through this year and slowing only gradually to 2.2% in 2024.

Inflation has become the most pressing economic issue for the US Federal Reserve. It has also begun to shape the political landscape of America as well, with household sentiment worsening amid rising gasoline and food prices.


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