Federal Reserve rises interest rates by 0.75 percentage point in an attempt to fight inflation
Federal Reserve hikes interest rates by 0.75 percentage points for the second time this year in an attempt to fight rising inflation. The Committee is strongly committed to returning inflation to its 2 percent objective in the long run together with achieving maximum employment.
In support of these goals, the Committee decided to raise the target range for the federal funds rate to 2.25% to 2.5% and anticipates that ongoing increases in the target range will be appropriate.
In addition, the Committee will continue reducing its holdings of Treasury securities, agency debt and agency mortgage-backed securities, as described in the Plans for Reducing the Size of the Federal Reserve’s Balance Sheet that were issued in May.
Even though recent indicators of spending and production have softened, job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures.
In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook.
The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the goals.
FOMC’s assessments will take into account a wide range of information, including readings on public health, labor market conditions, inflation pressures and inflation expectations, and financial and international developments.