Federal Reserve Raises Rates by a Quarter Percentage Point
After raising the benchmark interest rate by half of a percentage point last December, the Federal Reserve increased the rate by a quarter of a percentage point at its January/February meeting.
As anticipated, the rate-setting Federal Open Market Committee (FOMC) increased the federal funds rate, the amount banks charge each other for overnight loans, to a targeted range of 4.5%-4.75%.
This most recent increase marked the eighth since March 2022, when the Fed began raising rates in an effort to bring down inflation.
In his post-meeting press conference, Federal Reserve Chair Jerome Powell said, “We can now say, I think for the first time, that the disinflationary process has started.”
The FOMC’s post-meeting statement said inflation “has eased somewhat but remains elevated” and noted the need for “ongoing increases in the target range.”
In the statement, Fed officials said they would decide the “extent” of future increases based on the effects of the rate increases so far, the lags in which policy has an impact, and changes in financial conditions and the economy. In its past statement, the Fed said those factors would be used to decide the “pace” of future increases.