Half-Point U.S. Fed Rate Hike Biggest In 22 Years

The Federal Reserve on Wednesday (early Thursday, May 5, 2022, in Manila) announced its biggest rate hike since 2000, with a half percentage point increase as it works to crush soaring US inflation, Straits Times of Singapore reported.

Photo Insert: The US Federal Reserve

With inflation at the highest rate in four decades, Federal Reserve chairman Jerome Powell sent a message directly to the American people, expressing concern for the pain caused by rising prices, and pledging to use all available tools to bring them down.

But he told reporters he remains confident the economy is strong enough to withstand rate increases without tipping into a recession, Agence France-Presse (AFP) reported.

After a quarter-point hike in March, the US central bank’s policy-setting Federal Open Market Committee (FOMC) pushed the benchmark interest rate above 0.75 percent as it works to cool the economy, and confirmed more increases “will be appropriate,” Bloomberg also reported.

The hike will raise the costs of all types of borrowing, from mortgages to credit cards to car loans, cooling demand, and business activity.

Inflation has become an overriding concern after the world’s largest economy saw annual consumer prices surge 8.5 percent over the 12 months to March – the biggest jump since December 1981.

Policymakers continue to believe inflation will gradually return to the Fed’s 2 percent target as it raises borrowing costs, but in a statement following the conclusion of its two-day meeting, the FOMC said it will be “highly attentive to inflation risks.”

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