Fed Does Biggest Interest Rate Increase Since 1994

The Federal Reserve just raised interest rates 0.75%.

This is the highest increase since 1994.

From Newsmax:

The Federal Reserve on Wednesday intensified its drive to tame high inflation by raising its key interest rate by three-quarters of a point — its largest hike in nearly three decades — and signaling more large rate increases to come that would raise the risk of another recession.

The move the Fed announced after its latest policy meeting will increase its benchmark short-term rate, which affects many consumer and business loans, to a range of 1.5% to 1.75%.

The central bank is ramping up its drive to tighten credit and slow growth with inflation having reached a four-decade high of 8.6%, spreading to more areas of the economy and showing no sign of slowing. Americans are also starting to expect high inflation to last longer than they had before. This sentiment could embed an inflationary psychology in the economy that would make it harder to bring inflation back to the Fed’s 2% target.

They were only expected to do a 50 point increase until a few days ago.

From Fox Business:

Until just a few days ago, economists widely expected the central bank to proceed with a 50-basis point rate hike – double the typical size – at its June meeting. Policymakers had approved a 50-basis point hike in May and laid out a roadmap for similarly sized increases at their upcoming meetings, assuming that data evolved as expected.

Zero Hedge had a really good article going into even more detail on this – click here to read it.

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