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Well, the Fed really did. It raised interest rates by 0.25%, or 25 basis points, and in doing so raised its benchmark interest rate target to a range of 0.25% to 0.50%. This is the first time it has been done since 2018.
The cause of the increase in interest rates is inflation. As the Fed’s Open Market Committee said, “Inflation remains high, reflecting pandemic-related supply and demand imbalances, higher energy prices and broader price pressures. ”
Furthermore, as reported by Breitbart, the Fed has a high inflation forecast for the rest of the year and finds itself in a position to keep raising interest rates to deal with the inflation problem. In the words of that store:
The march forecast also showed officials expect inflation to stay at 4.3% by the end of the year, up from the 2.6% expected in December. Core inflation, excluding food and energy prices, are expected to increase 4.1%, up from 2.7% expected at the end of last year.
The projections also show that Fed officials expect their rate target to rise to 2.8% by the end of next year and stay high next year, well above the long-term projection of 2. .4%. It’s a sign that Fed officials think interest rates will have to stay high to overcome the inflationary pressures that have gripped the economy since the start of 202.
To that end, the Fed, in new economic projections released after its March meeting, projects another 0.25% rate hikes six more times throughout 2022.
Beyond that, there’s surprisingly little disagreement; The only Fed member to vote against a rate hike was Fed President St. Louis James Bullard, who voted against the measure not because he was against raising rates but because he wanted a 50 basis point increase.
The Fed also sees the current economy as strong, even if Russia invades Ukraine, and therefore can accommodate a rate hike. Fed Chairman Jerome Powell, in a statement following the rate hike, said:
“The probability of a recession next year is not particularly high. All signs suggest this is a strong economy, and one that will be able to thrive in the face of less accommodative monetary policy.. ”
https://smartzune.com/it-finally-happened-the-fed-just-took-this-step-to-combat-inflation/ It’s finally happening: The Fed just needs to take this step to fight inflation