The Federal Reserve raised interest rates by three-quarters of a percentage point in an effort to curb inflation. The key benchmark federal rate is now between 1.50% to 1.75%. It is the first time since 1994 that the Fed has raised interest rates by 0.75%.
Federal Reserve Chairman Jerome Powell suggested that the central bank could raise interest rates by the same amount after its next meeting in July.
“From the perspective of today, either a 50 basis point or a 75 basis point increase seems most likely at our next meeting,” Powell said during a press conference. “We anticipate that ongoing rate increases will be appropriate.”
After July, the Fed is likely to pull back on large rates, but Powell said those decisions will be made based on economic conditions at the time.
“The pace of those changes will continue to depend on incoming data and evolving outlook on the economy,” Powell said. “Clearly, today’s 75 basis point increase is an unusually large one, and I do not expect moves of this size to be common.”
Markets reacted positively to the anticipated announcement, with the Dow, Nasdaq, and S&P 500 all rallying into the black in late-day trading. The Dow Jones closed the day up 303 points, while S&P 500 finished ahead by 54 points and the Nasdaq was up by 270 points.