Fed approves highest rate hike in 28 years

In a move to slow the specter of inflation, the Federal Reserve today increased the target range for the federal funds rate by three-quarters of a percentage point to 1.5% to 1.75%—the central bank’s most aggressive hike since 1994.

At a press conference immediately following the announcement, Fed Chairman Jerome Powell said a similar increase may be necessary next month. “From the perspective of today, either a 50 basis-point or a 75 basis-point increase seems most likely at our next meeting,” Powell said. “We anticipate that ongoing rate increases will be appropriate.”

“Overall economic activity appears to have picked up after edging down in the first quarter,” the Federal Open Market Committee said in a statement. “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 energy prices and broader price pressures.” In addition, FOMC noted that the invasion of Ukraine by Russia is “weighing on global economic activity,” while causing “tremendous human and economic hardship” and “additional upward pressure on inflation.”