Fed Raises Rates by 0.75% as Rampant Inflation Forces Biggest Hike Since 1994

The Federal Reserve surprised markets on Wednesday with a larger than expected 0.75% rate increase as persistently high inflation compelled the central bank to deliver its biggest hike at a single meeting since 1994.

The Federal Open Market Committee raised its benchmark rate to a range of 1.5% to 1.75% from 0.75% to 1% previously. That was more hawkish than economists’ expectations for a 0.5% rate hike.

In the weeks leading up to the decision, Fed Chairman Jerome Powell said he wasn’t “actively considering” a 0.75% rate increase and signaled that a 0.5% hike would be appropriate at the June and July meetings.

But several signs showing above-trend inflation could stick around for longer than feared forced the central bank to step up the pace of monetary policy tightening to prevent falling further behind in the battle against inflation.

Source: Fed Raises Rates by 0.75% as Rampant Inflation Forces Biggest Hike Since 1994