General World News

Fed hikes rate by 75 bps, back to 2018 level

The Federal Reserve (Fed) on Wednesday raised the federal funds rate by another 75 basis points, to 2.25%-2.50%, delivering what was expected by most investors and economists in recent weeks. 

Designed to control persistent inflation, the decision will likely increase the cost of mortgage borrowing and further slow home sales, as the housing sector is particularly interest-rate sensitive. 

To stimulate economic activity during the COVID-19 pandemic, the Fed maintained the federal funds’ rates at 0%-0.25% between March 2020 and March 2022, when it started a tightening monetary policy to slow inflation. 

So far, it has resulted in a cumulative 225 basis points hike: details ⇒

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