Fed Raises Interest Rates by 75 Basis Points for Fourth Time This Year

The US central bank raised its benchmark interest rate by three-quarters of a point for the fourth time this year.

The Federal Reserve raised its benchmark interest rate by three-quarters of a point for the fourth time this year, matching rate hikes in June, July, and September, in its most aggressive drive in three decades to tamp inflationary pressures.

The Fed set the new benchmark interest rate to a target range between 3-3/4 to 4 percent.

According to the FOMC statement:

Recent indicators point to modest growth in spending and production. 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.

Russia’s war against Ukraine is causing tremendous human and economic hardship. The war and related events are creating additional upward pressure on inflation and are weighing on global economic activity. The Committee is highly attentive to inflation risks.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to raise the target range for the federal funds rate to 3-3/4 to 4 percent. The Committee anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time. In determining the pace of future increases in the target range, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments. In addition, the Committee will continue reducing its holdings of Treasury securities and 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. The Committee is strongly committed to returning inflation to its 2 percent objective.

The press release issued by the Board of Governors of the Federal Reserve System is available here.