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US Federal Reserve raises interest rates for third straight time, signals further aggressive moves
- Increase again by three-quarters of a percentage point meant to tame record-high inflation stoked by supply constraints and strong demand
- Benchmark rate now expected to rise to between 4.25 per cent and 4.5 per cent by year end, say officials who attended policy meeting
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US Federal Reserve officials on Wednesday raised interest rates by three-quarters of a percentage point for the third consecutive time and forecast further aggressive increases to tame record-high inflation stoked by supply constraints caused by Russia’s war against Ukraine and unexpectedly robust demand.
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Officials who attended the Fed’s most recent policy meeting expected to lift the rate by at least another 1.25 percentage point by the end of 2022, to a range between 4.25 per cent and 4.5 per cent, according to their new projections.
Before the move, traders had expected rates to reach 4.5 per cent in early 2023 before falling by about half a percentage point by the end of the year.
Briefing reporters in Washington after the rate increase announcement, Federal Reserve Chair Jerome Powell warned of the need for a restrictive policy stance “for some time”. He added that a median projection of 4.6 per cent for the Fed funds rate by the end of next year was “likely”.
“Although gasoline prices have turned down in recent months, they remain well above year-earlier levels, in part reflecting Russia’s war against Ukraine, which has boosted prices for energy and food and has created additional upward pressure on inflation,” Powell said.
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