The Federal Reserve intensified its fight against high inflation on Wednesday, raising its key interest rate by three-quarters of a point — the largest bump since 1994 — and signaling more rate hikes ahead as it tries to cool off the U.S. economy.
Federal Reserve Chairman Jerome Powell speaks during a news conference following an Open Market Committee meeting at the Federal Reserve Board Building, Wednesday, June 15, 2022, in Washington.WASHINGTON — The Federal Reserve intensified its fight against high inflation on Wednesday, raising its key interest rate by three-quarters of a point — the largest bump since 1994 — and signaling more rate hikes ahead as it tries to cool off the U.S. economy without causing a recession.
The central bank revised its policy statement to acknowledge that its efforts to quell inflation won't be painless, removing previous language that had said Fed officials expect “the labor market to remain strong.” “We’re not trying to induce a recession now,” he said. “Let’s be clear about that. We’re trying to achieve 2% inflation.”
Inflation has shot to the top of voter concerns in the months before Congress’ midterm elections, souring the public’s view of the economy, weakening President Joe Biden’s approval ratings and raising the likelihood of Democratic losses in November. In their updated forecasts Wednesday, the Fed's policymakers indicated that after this year's rate increases, they foresee two more rate hikes by the end of 2023, at which point they expect inflation to finally fall below 3%, close to their target level. But they expect inflation to still be 5.2% at the end of this year, much higher than they'd estimated in March.
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