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US targets inflation with biggest rate hike since 1994
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17 June 2022
WASHINGTON, 17 June 2022, (TON): The US Federal Reserve raised its target interest rate by three-quarters of a percentage point in an effort to drive down a surge in inflation, and projected a slowing economy and rising unemployment in the months to come.
The rate increase announced on Wednesday was the biggest by the US central bank since 1994, and was delivered after recent data showed little progress in its battle to control a sharp spike in prices.
The move raised the short-term federal funds rate to a range of 1.5 percent to 1.75 percent. With additional rate hikes, policymakers expect their key rate to reach a range of 3.25 percent to 3.5 percent by year’s end the highest level since 2008 meaning most forms of borrowing will become sharply more expensive.
The central bank’s policy-setting Federal Open Market Committee said “inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices and broader price pressures.”
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