US FED HIKES RATE BY .25%

The US Federal Reserve, as expected, raised its key short-term interest rate by a quarter percentage point (0.25%) on Wednesday, throttling back from a halfpoint hike in December and acknowledging that a historic inflation spike is slowing, the USA Today reports.

“Inflation has eased somewhat but remains elevated,” the Fed said in a statement after a two-day meeting.

But the central bank appears reluctant to signal that its aggressive campaign to beat back price increases is nearing an end even as it begins to balance the benefits of the initiative with growing recession risks.

In a statement, the Fed repeated that “ongoing (rate) increases…will be appropriate” to bring down yearly inflation to the Fed’s 2% goal. Some economists expected the Fed instead to say “additional increases” would be needed, hinting the Fed is close to winding down the hiking cycle.

Addressing the press conference, Fed Chair Jerome Powell said the “extent” of future rate increases will be based on factors such as the effects so far of the rate hikes, the lags in which policy has an impact, and developments in financial conditions, the economy and the inflation.

Fed interest rate now

The Fed’s latest move brings the federal funds rate to a range of 4.5% to 4.75%, up from near zero in March, in its boldest flurry of rate increases since the early 1980s.

The hike may slow economic activity as it drives up rates for credit cards, adjustable rate mortgages and other loans. But Americans, especially seniors, are reaping higher bank savings yields after years of meager returns.