The Fed's increases in its benchmark short-term rate typically lead, in turn, to higher borrowing costs for consumers and businesses, including for mortgages, auto loans and credit cards.
Federal Reserve Board Chair Jerome Powell speaks during a news conference at the Federal Reserve, Wednesday, May 4, 2022 in Washington. The 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.
The Fed chair, who was confirmed last week by the Senate to a second four-year term, suggested that the Fed would consider raising rates even faster if price increases fail to moderate. At a meeting earlier this month, the Fed raised its key rate by a half-point — double the usual increase — for the first time since 2000, to a range of 0.75% to 1%. And at a news conference after the meeting, Powell suggested that Fed officials would continue to raise its rate by a half-point, at both its June and July meetings.
“It’s been good to see financial markets reacting in advance” of upcoming rate hikes, Powell said. “That’s what we need.”
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