The Federal Reserve on Wednesday enacted its second consecutive 0.75 percentage point interest rate increase as it seeks to tamp down runaway inflation without creating a recession.
In taking the benchmark overnight borrowing rate up to a range of 2.25%-2.5%, the moves in June and July represent the most stringent consecutive moves since the Fed began using the overnight funds rate as the principal tool of monetary policy in the early 1990s.
While the fed funds rate most directly impacts what banks charge each other for short-term loans, it feeds into a multitude of consumer products such as adjustable mortgages, auto loans and credit cards. The increase takes the funds rate to its highest level since December 2018.
Markets largely expected the move after Fed officials telegraphed the increase in a series of statements since the June meeting, and held on to gains after the announcement. Central bankers have emphasized the importance of bringing down inflation even if it means slowing the economy.
In its post-meeting statement, the rate-setting Federal Open Market Committee cautioned that “recent indicators of spending and production have softened.”
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Article URL : https://www.cnbc.com/2022/07/27/fed-decision-july-2022-.html