Fed attacks inflation with its largest rate hike since 1994

WASHINGTON — The Federal Reserve intensified its fight against high inflation on Wednesday, raising its key interest rate by three-quarters of a point — the largest bump since 1994 — and signaling more rate hikes ahead as it tries to cool off the U.S. economy without causing a recession.

The unusually large rate hike came after data released Friday showed U.S. inflation rose last month to a four-decade high of 8.6% — a surprise jump that made financial markets uneasy about how the Fed would respond. The Fed's benchmark short-term rate, which affects many consumer and business loans, will now be pegged to a range of 1.5% to 1.75% — and Fed policymakers forecast a doubling of that range by year's end.

"We thought strong action was warranted at this meeting, and we delivered that," Fed Chair Jerome Powell said at a news conference in which he stressed the central bank's commitment to do what it takes to bring inflation down to the Fed's target rate of 2%. Getting to that point, he said, might result in a slightly higher unemployment rate as economic growth slows.

https://www.startribune.com/fed-attacks-inflation-with-its-largest-rate-hike-since-1994/600182068/