Economic Buzz: US Fed Hikes Interest Rate

5 May 2022 , 09:26 AM

In an effort to return elevated inflation to its 2 percent objective, the Federal Reserve on Wednesday announced its widely expected decision to raise interest rates by half a percentage point. The Fed announced that it has decided to raise the target range for the federal funds rate by 50 basis points to 0.75 to 1.0 percent and said it anticipates that ongoing increases in the target range will be appropriate. In addition, the Fed decided to begin reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities on June 1. The widely expected decision to raise interest rates came even though the Fed acknowledged that overall U.S. economy activity edged down in the first quarter. The Fed said inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures.

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