June 16, 2022

The Federal Reserve boosted interest rates by three-quarters of a percentage point, the most significant increase since 1994.

The Fed’s benchmark rate will end the year at 3.4 percent, according to the “dot plot” of individual members’ estimates, an upward revision of 1.5 percentage points from the March projection.

Officials also slashed their growth forecast for 2022, now expecting only a 1.7 percent increase in GDP, down from 2.8 percent in March.

The Federal Reserve launched its most vigorous anti-inflation campaign yet on Wednesday, hiking benchmark interest rates by three-quarters of a percentage point, the most extreme increase since 1994.

The Federal Open Market Committee, which sets interest rates, raised its benchmark funds rate to 1.5 percent -1.75 percent, the highest level since just before the Covid epidemic began in March 2020, putting an end to weeks of speculation.

Stocks were volatile after the decision but turned higher as Fed Chairman Jerome Powell spoke in his post-meeting news conference.

“Clearly, today’s 75 basis point increase is an unusually large one, and I do not expect moves of this size to be common,” Powell said. He added, though, that he expects the July meeting to see an increase of 50 or 75 basis points. He said decisions will be made “meeting by meeting” and the Fed will “continue to communicate our intentions as clearly as we can.”

Source: CNBC
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