The Federal Reserve has raised the benchmark short-term interest rates and signaled that up to six additional rate hikes are coming this year, according to a report from the Associated Press. The Fed’s quarter-point increase comes after the key rate has been near zero since the pandemic recession began two years ago. The increase is an effort to curb the high inflation that followed the recovery. The change will eventually mean higher loan rates for many consumers and businesses.
Central bank Chair Jerome Powell said the Federal Reserve will be taking a somewhat more aggressive approach to rate hikes than analysts had expected. He stressed his confidence that the economy is strong enough to withstand higher interest rates but said the Fed is focused on doing whatever it takes to reduce inflation to its 2% annual target.
The Fed also released a set of quarterly economic projections Wednesday that underscored the potential for extended interest rate increases in the months ahead. Seven hikes would raise its short-term rate to between 1.75% and 2% at the end of 2022. Fed officials also forecast four more rate increases in 2023, which would boost its benchmark rate to 2.8%. That would be the highest level since March 2008.
