On Wednesday, the Federal Reserve raised the central bank interest rate by 0.75% as it more aggressively fights rising costs to consumers.
NBC News reports:
On Wednesday, the central bank announced a rate increase of 0.75% — a sign it is acting more aggressively to fight rising consumer prices. It’s the first time since 1994 that the Fed raises the rate by that much.
The consumer price index, a key measure of inflation, came in at 8.6% on a year-on-year basis — hotter than expected last week. That triggered volatility in the stock market early this week. Notably, food price increases are hitting 40-year highs, while gas prices are also at a record-high. The higher-than-expected inflation reading jostled markets early in the week. On Monday, the S&P 500 officially entered bear market territory.
Market watchers say the Federal Reserve is trying to thread the needle of cooling off inflation while not tanking the broader economy.
“Chairman Jerome Powell and his colleagues are walking a monetary policy tightrope hoping to avoid a recession while dampening demand,” said Mark Hamrick, senior economic analyst at Bankrate in a note.