Federal Reserve raises interest rates by half point to fight inflation

Largest increase in 22 years comes as inflation is highest in four decades

Related video: Federal Reserve to raise interest rates

Leer en Español

The Federal Reserve has raised its benchmark interest rate by half a percentage point in a continued effort to fight inflation.

The central bank of the United States announced the largest increase in 22 years as it attempts to deal with the worst inflation the country has seen in four decades.

The move came after the Fed increased its benchmark rate in March by a quarter of one percentage point, its first raise since 2018.

The impact of a rates increase by the Fed is felt by Americans in higher interest rates on products such as credit cards, mortgages and business loans. Since the Fed raised its rate in March, 30-year fixed-rate mortgages have increased by more than one per cent to stand at above 5 per cent.

“The Committee is highly attentive to inflation risks,” said the Federal Open Market Committee in its latest policy statement and the vote to increase the rate was a unanimous one.

“The invasion of Ukraine by Russia is causing tremendous human and economic hardship. The implications for the U.S. economy are highly uncertain. The invasion and related events are creating additional upward pressure on inflation and are likely to weigh on economic activity,” the Fed said.

“In addition, COVID-related lockdowns in China are likely to exacerbate supply chain disruptions.”

Prices in the US have been rising faster than any time since the 1980s, up 8.5 per cent in March compared to the same month last year, according to the government’s Consumer Price Index.

Observers say that the current inflation has been caused by issues in the supply chain, combined with increased production costs, and consumer demand among other factors.

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Please enter a valid email
Please enter a valid email
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Please enter your first name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
Please enter your last name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
You must be over 18 years old to register
You must be over 18 years old to register
Opt-out-policy
You can opt-out at any time by signing in to your account to manage your preferences. Each email has a link to unsubscribe.

By clicking ‘Create my account’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Join our new commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in