The U.S. Federal Reserve on Wednesday raised its policy rate by 75 basis points and reiterated that further rate hikes would be appropriated to bring down inflation.
The benchmark rate has been raised to a range of 2.25% to 2.5% from 1.5% to 1.75% previously.
In the press conference, the Fed’s Chairman Jerome Powell said that the Fed anticipated that ongoing increases in the target range will be appropriate to curb elevated 40-year high inflation of over 9.1% to its long-run target of 2%.
The chairman also supported the idea of an interest rate hike at an unusually large figure in September, though added that a slower pace of hikes could be required to allow the central bank time to assess the impact of tighter policy measures on the economy and inflation.
“As the stance of monetary policy tightens further, it likely will become appropriate to slow the pace of increases…while we assess how our cumulative policy adjustments are affecting the economy and inflation,” Powell said.
The Fed Fund Rate is expected to reach 3.5% by the end of this year, while recession is projected by some economists to happen in the next six to twelve months.