Federal Reserve Raises Interest Rates Again, Signals More Hikes to Come
Washington, D.C. – The Federal Reserve raised its benchmark interest rate by a quarter percentage point on Wednesday, its eighth increase since March, and signaled that more hikes are likely in the coming months as it tries to tame inflation.
The central bank’s policy-setting Federal Open Market Committee (FOMC) voted unanimously to raise the target range for the federal funds rate to 4.25% to 4.5%, the highest level since 2007.
In a statement released after the meeting, the FOMC said it “anticipates that ongoing increases in the target range will be appropriate” to bring inflation back to its 2% target.
The Fed’s decision was widely expected, but the statement was more hawkish than some investors had hoped. The FOMC said that inflation “remains well above” its target and that “recent indicators suggest that labor demand significantly exceeds the supply of available workers.”
The Fed’s latest rate hike is another step in its effort to cool the economy and bring inflation under control. Inflation has been running at a 40-year high, driven by strong consumer demand and supply chain disruptions.
The Fed’s rate hikes are expected to slow economic growth by making it more expensive for businesses and consumers to borrow money. The central bank is hoping that this will reduce demand and ease inflationary pressures.
However, the Fed’s actions are also likely to lead to job losses and slower wage growth. The unemployment rate is expected to rise to 4.6% by the end of the year, up from 3.5% currently.
The Fed’s decision to raise rates again is a sign that the central bank is taking inflation seriously. However, it is also a reminder that the Fed’s actions are likely to have a significant impact on the economy.
Minutes of the Federal Open Market Committee, December 17-18, 2024
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