US Federal Reserve Raises Interest Rate By Half Point To Curb Inflation

Policymakers expect inflation to gradually return to the Fed’s target of two percent.


The Federal Reserve on Wednesday raised the benchmark lending rate by half a percentage point in its ongoing effort to control inflation, the highest in four decades.

After a quarter-point increase in March, the US central bank’s policy-making Federal Open Market Committee (FOMC) pushed the rate above 0.75 per cent as it continues tough policy to cool the economy, adding that A higher increase would be “justified.”

The FOMC said in a statement after the conclusion of its two-day meeting, policymakers continue to believe that inflation will gradually return to the Fed’s two-percent target as it raises borrowing costs, but ” Will be very watchful of inflation risks”.

The committee also noted the “highly uncertain” impact of external factors, including Russia’s invasion of Ukraine, which “are creating additional upward pressure on inflation and are likely to weigh on economic activity.”

In addition, the COVID lockdown in China is “likely to intensify supply chain disruptions,” the statement said.

The FOMC also said it would begin reducing its large bond holdings from June 1, starting at a pace of $47.5 billion a month, and then doubling after three months.

(Except for the title, this story has not been edited by NDTV staff and is published from a syndicated feed.)


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