The Federal Reserve anticipates that more interest rate hikes will be "appropriate" given that inflation in the United States is still relatively high, the central bank said on Wednesday after carrying out its smallest rate increase in almost a year
WASHINGTON (Pakistan Point News / Sputnik - 02nd February, 2023) The Federal Reserve anticipates that more interest rate hikes will be "appropriate" given that inflation in the United States is still relatively high, the central bank said on Wednesday after carrying out its smallest rate increase in almost a year.
The central bank's Federal Open Market Committee (FOMC) announced a 25-basis point hike in its policy statement for February, adding: "The Committee anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2% over time."
Inflation itself, as measured by the Consumer Price Index (CPI) rose by 6.5% in the 12 months to December - at least three times above the Fed's target.
The CPI hit a 40-year high in June when it grew at an annual rate of 9.1%. With its slowing, the Fed has also eased on the quantum of its rate hikes.
The Fed began raising rates with a 25-basis point hike in March 2020 to counter runaway inflation triggered by the trillions of dollars of government spending to fight the coronavirus pandemic. After a 50-basis point hike that followed the one in March, the central bank embarked on four jumbo-sized 75-basis point increases between June and November. It returned to a 50-basis point hike in December after a visible retreat in inflation.
