May 20, 2022

Wire Service Canada

Complete Canadian News World

The Federal Reserve raises interest rates by half a point, the largest increase since 2000

The Federal Reserve raises interest rates by half a percentage point, making the cost of money between 0.75% and 1%. For the Fed, this is the first half-point increase since 2000 and the first time since 2006 that it has raised interest rates in two consecutive meetings. In March, it raised the cost of money by a quarter point.

The war in Ukraine is likely to create upward pressures for inflation and affect growth. However, the Federal Reserve notes that there is great uncertainty about the repercussions of the conflict on the US economy.

The Fed’s balance sheet reduction will begin in June at a rate of $47.5 billion per month through August. The Fed said this at the end of the two-day meeting, confirming that further rate hikes are appropriate.

“I want to speak directly to the Americans: inflation is too high and it is necessary to bring it down” to ensure a recovery that benefits everyone. This was stated by Federal Reserve Chairman Jerome Powell in his first in-person press conference in nearly two years. The Fed “has the tools to bring down inflation and is moving quickly to bring it down.”
The Fed is “not seriously considering” a possible rate hike from 75 basis points in June. Powell’s words give Wall Street wings.

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