Chair Jerome H. Powell presents the Monetary Policy Report on February 12, 2020|Federalreserve|CC PDM 1.0
The Federal Reserve on Wednesday raised its interest rate by half a percentage (a 0.5% hike)—the largest hike the country has seen in 22 years. Critics view the move as a way of tackling inflation.
“Inflation is much too high and we understand the hardship it is causing,” said Federal Reserve Chairman Jerome Powell addressing reporters. “And we're moving expeditiously to bring it back down.”
As the country is coming out of a pandemic, consumer prices surged 8.5% annually in March—the highest rate in 41 years.
The central bank has signaled interest rate hikes at every meeting for the rest of the year, which means five more hikes.
Powell added that a .75% hike is not something the committee is “actively considering,” but also pointed out that the next two meetings may witness a 0.5% increase. The decision would be made at the meetings.
The aggressive approach comes when experts are concerned that the country may face a recession next year.
