By Anadolu Agency
November 2, 2022 3:00 pmANKARA
The US Federal Reserve raised its benchmark interest rate Wednesday by 75 basis points for the fourth consecutive time to fight record inflation.
The Federal Open Market Committee (FOMC) unanimously decided to raise the target range for the federal funds rate to between 3.75% and 4% — its highest since January 2008.
The decision comes after the central bank made a June 15 interest rate increase of 75 basis points, the largest in 28 years, and followed that with another hike of 75 basis points July 27, and an additional 75 basis points Sept. 21.
Investors and economists wanted to see hints in a post-meeting statement whether the Fed would lift its foot off the gas but the FOMC added: “In determining the pace of future increases in the target range, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.”
The Fed has raised rates 375 basis points, or 3.75%, since March, while the FOMC said it “anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time.”
“The Committee will continue to monitor the implications of incoming information for the economic outlook,” it said, adding it “would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals.”
The aggressive rate hikes are a result of record consumer and producer prices which are hovering around their highest in 40 years.
US annual consumer inflation came in at 8.2% in September, slightly down from the 8.3% yearly gain in August. Producer inflation rose 8.5%, slowing from August’s 8.7% increase. The numbers, however, are a sharp decline from record figures earlier this year.
While annual consumer prices posted a 9.1% gain in June, the largest 12-month increase since November 1981, producer prices saw their largest annual jump since a record 11.6% gain in March.
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