As was widely expected, the Federal Reserve today raised interest rates by three-quarters of a percent, the largest hike it has put into effect since 1991. In an announcement, the Federal Reserve said that it is now targeting its short-term interest rates at 1½  to 1¾ percent.
“Overall economic activity appears to have picked up after edging down in the first quarter. Job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures,” the Fed said in its statement.
“The invasion of Ukraine by Russia is causing tremendous human and economic hardship,” the Fed continued. “The invasion and related events are creating additional upward pressure on inflation and are weighing on global economic activity. In addition, Covid-related lockdowns in China are likely to exacerbate supply chain disruptions.”
The decision to raise interest rates by three-quarters of a percentage point was on a nine to one vote by the Fed”™s committee that oversees setting of interest rates. Only committee member Esther L. George voted against, saying she wanted to hold the increase to ½ percent.
The Fed said it is committed to bringing inflation down to 2 percent.
