Federal Reserve approves 1st interest rate hike in more than three years, sees six more ahead

  • The Fed approved a 0.25 percentage point rate hike, the first increase since December 2018.
  • Officials indicated an aggressive path ahead, with increases coming at each of the remaining six meetings in 2022.
  • Members also pared expectations for economic growth this year and sharply raised their outlook for inflation.

The Federal Reserve on Wednesday approved its first interest rate increase in more than three years, an incremental salvo to address spiraling inflation without torpedoing economic growth.

After keeping its benchmark interest rate anchored near zero since the beginning of the Covid pandemic, the policymaking Federal Open Market Committee said it will raise rates by a quarter percentage point, or 25 basis points.

That will bring the rate now into a range of 0.25%-0.5%. The move will correspond with a hike in the prime rate and immediately send financing costs higher for many forms of consumer borrowing and credit.

Along with the rate hikes, the committee also penciled in rate hikes at each of the six remaining meetings this year.

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