The Federal Reserve on Wednesday raised its benchmark interest rates by 75 basis points – or 0.75 percent point – in its latest battle against Bidenflation.
This is the biggest increase since 1994.
“Overall economic activity appears to have been 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. “
The Federal Reserve on Wednesday launched its biggest broadside yet against inflation, raising benchmark interest rates three-quarters of a percentage point in a move that equates to the most aggressive hike since 1994.
Ending weeks of speculation, the rate-setting Federal Open Market Committee took the level of its benchmark funds rate to a range of 1.5% -1.75%, the highest since just before the Covid pandemic began in March 2020.
Additionally, members indicated a much stronger path of rate increases ahead to arrest inflation moving at its fastest pace going back to December 1981, according to one commonly cited measure.
The Fed’s benchmark rate will end the year at 3.4%, according to the midpoint of the target range of individual members’ expectations. That compares with an upward revision of 1.5 percent points from the March estimate. The committee then sees the rate rising to 3.8% in 2023, a full percentage point ramp higher.
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