The Federal Reserve announced the largest interest rate hike since the turn of the century.
Wednesday afternoon it would raise the federal funds rate, which is the target interest rate at which commercial banks borrow and lend reserves, by 50 basis points to a target range of 0.75% to 1%—a widely expected move following aThe increase—the largest since May 2000—was approved unanimously and comes after Fed Chair Jerome Powellinflation is"much too high" in late March and pledged to"move expeditiously… to restore price stability.
For months, Fed policymakers signaled they would begin raising rates in March, but the pace and intensity of expected rate hikes has grown amid relentlessly strong inflation and criticism that the central bankannounced it would begin reducing the size of its balance sheet by as much as $47.5 billion per month beginning on June 1, and as much as $95 billion per month starting in September.
Despite a choppy day of trading, stocks ticked up immediately after the announcement, with the Dow Jones Industrial Average climbing 138 points, or 0.4%, to 33,266 points by 2:10 p.m. ET, while the S&P also added 0.4%.“Although overall economic activity edged down in the first quarter, household spending and business fixed investment remained strong.
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