The Federal Reserve intensified its fight against the worst inflation in 40 years.
WASHINGTON — The Federal Reserve intensified its fight against the worst inflation in 40 years by raising its benchmark interest rate by a half-percentage point Wednesday — its most aggressive move since 2000 — and signaling further large rate hikes to come.
Speaking at a news conference Wednesday, Chair Jerome Powell made clear that further large rate hikes are coming. He said that additional half-point increases in the Fed’s key rate “should be on the table in the next couple of meetings” in June and July. At his news conference, Powell stressed his belief that “restoring price stability” — that is, curbing high inflation — is essential to sustaining the economy’s health.
Starting June 1, the Fed said it would allow up to $48 billion in bonds to mature without replacing them, a pace that would reach $95 billion by September. At September’s pace, its balance sheet would shrink by about $1 trillion a year. The balance sheet more than doubled after the pandemic recession hit as the Fed bought trillions in bonds to try to hold down long-term borrowing rates.
The Fed’s credit tightening is already having some effect on the economy. Sales of existing homes sank 2.7% from February to March, reflecting a surge in mortgage rates related, in part, to the Fed’s planned rate hikes. The average rate on a 30-year mortgage has jumped 2 percentage points just since the start of the year, to 5.1%.
Even if the Fed’s benchmark rate were to go as high as 2.5% by year’s end, Powell said last month, the policymakers may still tighten credit further — to a level that would restrain growth — “if that turns out to be appropriate.”
Australia Latest News, Australia Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Fed raises key rate by a half-point in bid to tame inflationThe Federal Reserve intensified its drive to curb the worst inflation in 40 years by raising its benchmark short-term interest rate by an sizable half-percentage point
Read more »
Fed raises key rate by a half-point in bid to tame inflationThe Federal Reserve intensified its drive to curb the worst inflation in 40 years by raising its benchmark short-term interest rate by an sizable half-percentage point
Read more »
Fed raises key rate by a half-point in bid to tame inflationBREAKING: The Federal Reserve intensified its drive to curb the worst inflation in 40 years by raising its benchmark short-term interest rate by a sizable half-percentage point — its largest in 22 years.
Read more »
Federal Reserve raises key rate by a half-point in bid to tame inflationThe half-point hike in the Fed’s key rate — its largest since 2000 — raised it to a range of 0.75% to 1%, the highest point since the pandemic struck two years ago.
Read more »
Fed raises key interest rate by a half-pointThe increase in the Fed’s key rate raised it to a range of 0.75% to 1%, the highest point since the pandemic struck two years ago.
Read more »
Fed lifts interest rates by 1/2 point and to launch sell-off of $9 trillion bond stockpile in JuneThe Federal Reserve on Wednesday raised a key interest rate by a half point and reaffirmed a more aggressive strategy to try to subdue the worst outbreak of...
Read more »