The Federal Reserve will raise the interest rates by a quarter of a percentage point to a target range of 0.25% to 0.5%, according to the latest Federal Open Market Committee statement issued today. The committee also said that it will begin reducing its holdings of Treasury securities, debt and agency mortgage-backed securities at a coming meeting.
“With appropriate firming in the stance of monetary policy, the committee expects inflation to return to its 2% objective and the labor market to remain strong,” the committee said in its statement. It added that indicators of economic activity and employment have continued to strengthen and that job gains have been strong in recent months, with the unemployment rate declining substantially.
In a press conference after the release of the FOMC statement, Fed Chairman Jerome Powell said that the committee feels that the economy is “very strong and well-positioned to withstand tighter monetary policy.”
The committee said that implications of the invasion of Ukraine by Russia for the U.S. economy are highly uncertain, “but in the near term the invasion and related events are likely to create additional upward pressure on inflation and weigh on economic activity.” Powell said that the country is already seeing some short-term upward pressure on inflation due to higher oil prices and noted that supply chain issues could emerge.