October 1, 2022

The Federal Reserve raised its benchmark interest rate by 0.75 percentage points on Wednesday, the fifth time this year that the U.S. central bank has raised interest rates as it tries to reduce red-hot inflation.

The Fed’s target interest rate is now in the range of 3% to 3.25%, the highest level in 14 years. The bank’s rate-setting body noted that inflation remained “elevated” and said it was “very cautious about inflationary risks”.

Inflation has emerged as the most pressing economic issue this year, with prices for everything from housing to groceries outpacing wage increases and squeezing consumers.

Fed Chairman Jerome Powell is scheduled to hold a press conference at 2:30 PM ET. His remarks will be scrutinized for clues as to whether the Fed expects to ease the pace of interest rate hikes in the coming months or continue significant credit tightening until it is satisfied that inflation is abating.

In August, Powell warned that the Fed’s monetary tightening would “bring pain” to Americans. Wall Street interpreted that as meaning the central bank would keep rates elevated even if it harmed economic growth, including triggering a recession.

This is a developing story. The Associated Press contributed reporting.

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