Fed raises rates by 0.75 points, biggest gain since 1994

Fed raises rates by 0.75 points, biggest gain since 1994

The measure is surprisingly deep and aims to fight inflation

The Federal Reserve, or the Federal Reserve, has decided to raise interest rates in the country by 75 percentage points, an astonishing increase and the largest increase since 1994.

The decision, announced by the Federal Open Market Committee of the Federal Reserve, keeps interest rates within a target range of 1.5% to 1.75%, with a central objective of containing inflation.

That’s 25 percentage points higher than the 50 basis-point increase the Fed has considered in recent weeks for its next meeting.

On May 4, the Fed announced its biggest increase in more than 20 years, a 0.5 percentage point increase, double the pace in March. Rate hikes have been capped at 25 basis points since the early 2000s.

This time, given the seriousness of the decision, there was no consensus on the decision, as Kansas City Fed President Esther George had voted for a 50 basis point rate hike.

The committee assured it was “highly concerned” about the risks posed by inflation. In addition, it warned that the restrictions China is implementing in response to covid-19 may once again affect global supply chains.

Likewise, central bankers continue to expect fresh gains in currency prices at future meetings. On the other hand, the balance sheet reduction plan remains unchanged. Between June and August, it will decrease by $47.5 billion per month, after which it will increase to $60 billion.

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