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US Fed Raises Rates by 75 Basis Points

The increase in the Federal Funds rate marks the largest rate hike since 1994

On Wednesday, the Federal Open Market Committee (FOMC) voted to raise its benchmark Federal Funds rate by 75 basis points (bps) to a range of 1.5% to 1.75%,

its largest rate hike for a single meeting dating back to 1994.1 The interest rate decision capped off the Federal Reserve’s two-day June policy meeting,

where the U.S. central bank was widely expected to raise interest rates.

The Federal Reserve has decisively pivoted its policy stance in recent months to address rising inflation.

Consumer Price Index (CPI) inflation accelerated to a new 40-year high of 8.6% in May, surpassing the previous high of 8.5% set in March.

The latest reading indicated that inflation rates have not yet peaked, with more aggressive action by the Federal Reserve required to tame surging inflation.

The current rate of 8.6% is more than four times the Fed’s long-run inflation target of 2%.

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