Federal Reserve Raises Rates by Half Percentage Point, Signaling Slowing of Rate Hikes

by Just the News Staff


The Federal Reserve on Wednesday announced a reduced but still notable hike in U.S. interest rates, with the central bank moving to hike rates by half a percentage point as part of its ongoing efforts to tamp down inflation.

The hike, which comprises 50 basis points, is less than the three-quarter-point hikes the bank has enacted every month for the last several months, though it still represents a significant raise at a time when the economy remains fragile after years of turmoil and unertainty.

The bank indicated that it may raise rates again in the near future if it deems those measures appropriate.

“The [Federal Open Market Committee] anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time,” the Fed said in a press release.

Analysts have warned that too many hikes over too short a time period could tip the U.S. economy—already fragile from years of supply chain crises, historic inflation and sky-high gas prices—into a potentially severe recession.

A persistent labor shortage has also constricted both national and local economies, with businesses struggling to fill positions as workers have largely stayed out of the labor pool en masse.

In its press release, the Fed argued for a more optimistic view of the U.S. economy amid those difficulties.

“Recent indicators point to modest growth in spending and production,” the bank said, “Job gains have been robust in recent months, and the unemployment rate has remained low.”

The bank did note that “inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures.”

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Background Photo “Federal Reserve Building” by AgnosticPreachersKid. CC BY-SA 4.0.


Reprinted with permission from Just the News

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