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• The interest rate will now range between 1.5% and 1.75%
The US Federal Reserve raised the short-term benchmark interest rate by three quarters of a percentage point or 75 basis points on Wednesday.
The Federal Open Market Committee’s (FOMC) decision will now throw the rate between a range of 1.5% and 1.75%. This is the largest increase in interest rates Fed since 1994.
According to the “dot plot” of individual members’ expectations, the Fed’s benchmark rate will end the year at 3.4%, an upward revision of 1.5 percentage points from the March estimate.
Growth outlook
Officials also significantly cut their outlook for 2022 economic growth, now anticipating just a 1.7% gain in GDP, down from 2.8% from March.
At his post-meeting news conference, Federal Reserve Chairman Jerome Powell said, “Clearly, today’s 75 basis point increase is an unusually large one, and I do not expect moves of this size to be common.”
He added that he expected the July meeting to see an increase of 50 or 75 basis points. He said decisions will be made “meeting by meeting” and the Fed will “continue to communicate our intentions as clearly as we can.”
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Source: Federal Reserve