The US Federal Reserve raised the key interest rates 2022 on Wednesday, twice the size of the usual rate increase, for the second time this year.
The Federal Open Market Committee (FOMC), the panel of Federal Reserve officials responsible for monetary policy, boosted interest rates by 0.5 percentage point to a target range of 0.75 to 1 per cent.
After leaving interest rates close to zero for the whole of 2021, Fed Chair Jerome Powell and other bank leaders pledged to quickly bring borrowing costs back to levels that would not stimulate the economy.
Senior Federal Reserve officials confirmed that they would raise interest rates by 0.5 percentage point in the weeks leading up to the Federal Open Market Committee meeting in May after agreeing to a 0.25 percentage point increase in March.
Consumer prices rose 6.6 percent over the twelve months to March, according to the Personal Consumption Expenditure (PCE) price index, while the Fed aims for annual inflation of 2 percent each year.
The moves, announced after a two-day policy meeting Wednesday, will raise the central bank’s benchmark federal-funds rate to a target range between 0.75% and 1%.
Together, the steps mark the most aggressive Fed tightening of monetary policy at one meeting in decades, aimed at rapidly reducing the economic stimulus that has contributed to rising price pressures. The Fed, which usually lifts interest rates in quarter-percentage-point increments, last raised rates by a half point in 2000.
Major stock indexes rose after Fed Chairman Jerome Powell said the central bank is not “actively considering” raising interest rates in three-quarter percentage point increments. Shares of technology companies notched some of the biggest gains.