The U.S. Federal Reserve raised its benchmark interest rate by another 75 basis points and
said more hikes are coming as it strives to bring inflation down to its 2% target.
America’s central bank lifted its trendsetting federal funds interest rate up to a range of 3%-
3.25%, its highest level since the financial crisis of 2008.
The Fed has now raised interest rates by 75 basis points at its last three meetings. Inflation in
the U.S. currently sits at 8.3%, its highest level since the early 1980s.
Notes from its most recent meeting indicate that the central bank plans to raise interest rates by
another 1.25% at its two remaining meetings this year.
“The (Fed) is strongly resolved to bring inflation down to 2%, and we will keep at it until the job
is done,” said Federal Reserve Chair Jerome Powell during a news conference that followed the
latest rate hike announcement.
The interest rate increases this year have been the most aggressive monetary tightening in the
U.S. since the Fed began using the overnight federal funds rate as its main policy tool in 1990.
Powell also said that the central bank intends to continue lifting interest rates until they reach
4.6% in 2023. That suggests a 25 basis point rate hike next year and no decreases.
Responding to reporters’ questions, Powell conceded that a recession in the U.S. is possible if
the Fed keeps raising interest rates.
U.S. stocks sold off sharply immediately after the latest interest rate decision by the Fed, with
the Dow Jones Industrial Average falling more than 500 points on the day.
