The Federal Reserve is raising interest rates for the first time since 2018, the central bank announced Wednesday at the conclusion of its highly anticipated two-day monetary policy meeting.
The move marks the end of the Fed’s pandemic-era easy money policy and comes amid soaring inflation across America. The federal funds rate now stands at 0.25-0.5%. The quarter-percentage-point increase had been well telegraphed by the central bank, with Chair Pro Tempore Jerome Powell hinting at it repeatedly over the past few months. Earlier this month, Powell told lawmakers that he favored a quarter-point raise. This is the first rate increase since December 2018 and the first time rates have moved from their level of near zero since the bank slashed them almost exactly two years ago in March 2020 in the wake of the pandemic. Prices have soared over the past year for the majority of Americans, pushing inflation well above the Fed’s long-term target of 2% and forcing its hand.
