Fed hikes interest rate again in bid to tamp down runaway inflation

Abstract

The Federal Reserve raised its interest rate by 75 basis points during its Wednesday meeting. The hike comes amid its continued bid to reduce inflation and is its second consecutive such raise and fourth overall raise to date. The move brings its target range to 2.25% to 2.50%. Fed Chairman Jerome Powell pointed to an "Extremely tight" labor market and reaffirmed the Fed's commitment to bring inflation down, noting the Fed also anticipates ongoing increases in the target range for federal funds will be appropriate as it continues to move to stabilize prices. The committee will consider hikes on a meeting by meeting basis, he said. The hike, in line with expectations before the Wednesday meeting, comes in the face of continuing economic pressures throughout the country, with inflation at a four-decade high. Fears of a potential recession have abounded as inflation continues to spike, with Powell admitting that while the Fed was not expecting a good reading on inflation, results for June were "Worse than expected." June data from the Bureau of Labor Statistics showed consumer prices shot up 9.1% last month, with food, shelter and gas seeing particular spikes. The chairman does not believe the U.S. economy is in a recession currently as there are "Too many areas of the economy that are performing well," pointing to the strength of the labor market in particular.