Fed raises key rate by a half-point in bid to tame inflation

Remark appeared to cause stock indexes to jump.

May 05, 20220

Pete Marovich, New York Times count

The headquarters of the Federal Reserve in Washington on March 23, 2022. To try to slow inflation, the Federal Reserve raised interest rates half a percentage point on Wednesday, May 4, 2022, which would be its largest increase since 2000.

WASHINGTON - The Federal Reserve intensified its fight against the worst inflation in 40 years by raising its benchmark interest rate by a half-percentage point Wednesday - its most aggressive move since 2000 - and signaling further large rate hikes to come.

The increase in the Fed's key short-term rate raised it to a range of 0.75% to 1%, the highest point since the pandemic struck two years ago.

The Fed also announced that it will start reducing its huge $9 trillion balance sheet, made up mainly of Treasury and mortgage bonds. Reducing those holdings will have the effect of further raising borrowing costs throughout the economy.

https://www.startribune.com/fed-raises-key-rate-by-a-half-point-in-bid-to-tame-inflation/600170460/