The Fed hikes rates by 75 basis points for the fourth straight month

That federal reserve on Wednesday raised its benchmark interest rate by 75 basis points for the fourth straight month as it struggles to bring runaway inflation under control, a move that has further slowed U.S. economic growth and worsened financial woes for millions of homes and businesses could aggravate.

The three-quarters-point hikes in June, July, September and November underscore how serious Fed officials are about managing the inflation crisis after a series of alarming economic reports. Policymakers unanimously voted in favor of the latest outsized increase.

The widely anticipated move takes the federal funds rate into a range of 3.75% to 4%, the highest level since the 2008 financial crisis, from near zero in March. This is the sixth straight rate hike this year and brings rates into tightly restrictive territory.

However, the Fed also pointed to the possibility of lower rate hikes at future meetings, as policymakers acknowledged that tighter monetary policy takes time to work through the economy, increasing the risk of a recession.


“The committee believes that continued increases in the target range will be appropriate to achieve monetary policy restrictive enough to bring inflation back to 2 percent over time,” the Fed said in a new sentence, which is hers Debriefing was added statement.

Officials noted that they 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” when determining how much to raise interest rates in the coming months must.

The statement’s shift comes amid heightened uncertainty about the health of the economy: Inflation remains painfully high and the job market is still unusually tight, but both the real estate and manufacturing sectors are weak.


“I’ve said at the last two press briefings that at some point it will be appropriate to slow the pace of increases,” Chairman Jerome Powell told reporters during a press briefing in Washington. “So that time is coming. And it can come at the next meeting or the one after that. No decision has been made yet.”

Powell later added that it was “premature” to consider pausing rate hikes, noting that accounting for the delay in monetary policy does not mean Fed officials are ready to halt rate hikes.

“Let me say that,” he said. β€œIt is very premature to think of a break. When people hear delays, they think of pauses. In my view, it is very premature to talk about pausing our rate hikes. We still have a long way to go.”

US Federal Reserve Chairman Jerome Powell

Federal Reserve Chairman Jerome Powell arrives to speak during a press conference following a Federal Open Market Committee (FOMC) meeting on Wednesday, September 21, 2022, in Washington, DC, USA. (Photographer: Sarah Silbiger/Bloomberg via Getty Images/Getty Images)

The Fed’s efforts to cool the economy and bring inflation closer to its 2% target mark the most aggressive tightening campaign since the 1980s. But efforts to fight inflation have potential danger of a recessionand a growing number of economists and Wall Street firms are forecasting a downturn this year or next as the Fed tries to thread the needle between containing inflation without squashing growth.

“It’s too hard,” Tomas Philipson, an economist at the University of Chicago and former chair of the White House Council of Economic Advisers, told FOX Business. “That’s not it [Fed is] not capable of. It’s just that it’s impossible. It’s like planning a wedding on a sunny day next summer. You can’t predict the weather and you can’t predict the economy.”


Inflation ran even hotter-than-expected last month, with the consumer price index, a broad measure of the price of basic necessities that includes petrol, groceries and rent, rising 0.4% mom in September, beating hopes nullified on a slowdown. on an annual basis, inflation is running at 8.2% – a nearly 40-year high.

Rising interest rates tend to result in higher interest rates on consumer and business loans, which slows the economy by forcing employers to cut spending. Mortgage rates have already more than doubled to over 7% in the past year.


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