Federal Reserve Raises Rates by a Quarter Percentage Point
The Federal Reserve recently increased the benchmark interest rate by a quarter of a percentage point, the ninth increase since March 2022.
The increase takes the benchmark federal funds rate, the amount banks charge each other for overnight loans, to a target range between 4.75%-5%.
In its post-meeting statement, the rate-setting Federal Open Market Committee (FOMC) departed from past statements that “ongoing increases” would be appropriate in the future to bring down inflation to state that future rate increases are not assured and that “some additional policy firming may be appropriate” to return inflation to 2%.
In his post-meeting press conference, Federal Reserve Chair Jerome Powell said the FOMC considered a pause in increases because of the recent banking crisis but that the committee unanimously approved the increase due to inflation data and labor market conditions. Powell additionally indicated the FOMC would not cut rates in 2023.
FOMC officials also released updated projections on the terminal rate, the rate at which the benchmark fed funds rate will peak. The rate remains at 5.1%, unchanged from the prior estimate in December.