Fed Raises Interest Rates By Another Quarter Point, Signals Further Rate Hikes

The Federal Reserve on Wednesday announced its widely anticipated decision to raise interest rates by another quarter point.

After a two-day meeting, the Fed said it has decided to raise the target range for the federal funds rate by 25 basis points to 4.50 to 4.75 percent.

The latest interest rate hike comes after the central bank raised rates by 75 basis points in November and by 50 basis points in December.

The Fed also said it anticipates ongoing increases in interest rates will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time.

“In determining the extent of future increases in the target range, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments,” the Fed said.

The decision to continue raising interest rates comes as the Fed seeks to achieve its dual goals of maximum employment and inflation at the rate of 2 percent over the longer run

The Fed noted that inflation has eased somewhat but remains elevated and said it remains highly attentive to inflation risks.

The central bank also pointed out that job gains have been robust in recent months and the unemployment rate has remained low.

The Fed reiterated that it would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of its goals.

The next monetary policy meeting is scheduled for March 21-22, with CME Group’s FedWatch Tool currently indicating an 81.8 percent chance the Fed will raise rates by another 25 basis points.

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