The US Federal Reserve raised interest rates by 75 basis points to 1.75 percent. The 75 basis point rate hike by the FED was the biggest increase since 1994. Only Esther George objected to the high rate hike and voted for a 50 basis point increase. While downward forecasts for economic growth emerged, forecasts for unemployment and interest rate hikes were revised upwards.
Fed Chairman Jerome Powell said: “We will see progress on inflation soon, and I think our forward guidance is still credible. "We're not trying to cause a recession," he said.
FED rate decision announced!
The interest rate decision, which the markets have been eagerly waiting for, has been announced. The Fed increased the rate by 75 basis points to 1.75 percent. Thus, the highest interest rate increase in the last 28 years was realized. The interest rate decision was taken by a vote of 10-1. Esther George opposed a 75 basis point rate hike and voted for a 50 basis point increase. Fed officials' average FED fund rate expectation for the end of 2022 was 3,4 percent. The average FED fund rate expectation for the end of 2023 was 3,8 percent.
Pointing out that economic activity in the USA has recovered and employment gains continue to be strong, FED said, “General economic activity seems to have recovered after the decline in the first quarter. Employment gains have been strong in recent months and the unemployment rate has remained low. Inflation remains high, reflecting supply and demand imbalances related to the pandemic, higher energy prices and wider price pressures.
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