With the country feeling the palpable day-to-day pain buried under the worst inflation numbers in over four decades, the Federal Reserve took action on Wednesday and did something they haven’t done in almost 30 years; it raised its benchmark interest rate by 75 basis points.
It hadn’t happened since 1994, so that should show you how urgent it is to deal with the runaway inflation under Joe Biden’s leadership. With this move, the key benchmark federal funds now rate at a range between 1.50% to 1.75%.
There’s more to come, too. The Fed shared details of an aggressive path of rate increases for the remainder of 2022. Look for interest rates to be around 3.4% when we ring out the year at the end of December.
Here’s part of a statement the Fed delivered after the announcement.
“Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures.”
Stocks were up early in the day, but all those gains disappeared after the announcement.
Fed Chairman Jerome Powell had this to say at a press conference Wednesday.
“We anticipate that ongoing rate increases will be appropriate. The pace of those changes will continue to depend on the incoming data and the evolving outlook for the economy. Clearly, today’s 75-basis point increase is an unusually large one, and I do not expect moves of this size to be common…We will, however, make our decisions meeting by meeting and will continue to communicate our thinking as clearly as we can.”