17 Mar 2022 , 08:37 AM
The Federal Reserve on Wednesday raised its benchmark interest rate by a quarter percentage point, in an effort to combat inflation at 40-year highs. The Fed said it has decided to raise the target range for the federal funds rate by 25 basis points to 0.25 to 0.5 percent. Additionally, the Fed said it expects to begin reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities at a coming meeting. The central bank also predicted ongoing rate hikes will be appropriate, with the Feds latest projections pointing to an interest rate of 1.9 percent by the end of the year. The rate hike came even as the Fed acknowledged Russias invasion of Ukraine is causing tremendous human and economic hardship. Powell said the Russian invasion of Ukraine could hurt the U.S. economy in the short run and is already putting upward pressure on inflation due to higher oil prices. The conflict is also likely to disrupt already-strained global supply chains, a big source of the rapid increase in prices and that could delay a slowdown in inflation until later in 2022. Potentially reflecting the impact of the invasion, Fed officials lowered their projections for GDP growth in 2022 to 2.8 percent from 4.0 percent and raised their projections for consumer price growth to 4.3 percent from 2.6 percent. The Fed reiterated it would continue to monitor the implications of incoming information for the economic outlook when assessing the appropriate stance of monetary policy.
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