The Federal Reserve hiked a key interest rate again by three-quarters of a percent Wednesday, extending its most aggressive increase in two decades as the central bank tries to contain inflation running at a 41-year high.
Despite concerns of a possible recession, the Fed announced the fourth increase in its benchmark borrowing rate since March to tamp down inflation that reached an annual rate of 9.1% in June. The Fed said that ongoing increases in its target range “will be appropriate” in the months ahead.
In its statement, the central bank’s open market committee said it is weighing a variety of conflicting economic data.
“Recent indicators of spending and production have softened,” the Fed said in a statement. “Nonetheless, job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures.”
It said Russia’s war against Ukraine “is causing tremendous human and economic hardship.”
“The war and related events are creating additional upward pressure on inflation and are weighing on global economic activity,” it said.
The move will result in increases in rates for home mortgages and other consumer loans. Mortgage rates have risen to about 5.5% this year after averaging 3% in 2021.