The US Federal Reserve has raised interest rates by 50 basis points (bps) and projected at least an additional 75 bps of increases by the end of 2023.
The Federal Open Market Committee of the Federal Reserve said the new interest rates was approved unanimously. The central bank's policy rate is now in a target of 4.25-4.50 per cent, the highest level in 15 years.
The Fed said in a release on Wednesday, "The Committee seeks to achieve maximum employment and inflation at the rate of 2 per cent over the longer run. In support of these goals, the Committee decided to raise the target range for the federal funds rate to 4-1/4 to 4-1/2 per cent."
The Fed statement said the Committee anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 per cent over time.
Federal Reserve Chairman Jerome Powell said the bank wanted to slow down to see how the economy is responding to the cumulative impact of the hikes, which have increased the cost of mortgages, car and business loans, and credit card debt.
Chairman Jerome Powell said, "With today's action, we have raised interest rates by 4-1/4 percentage points this year. We continue to anticipate that ongoing increases in the target range for the federal funds rate will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 per cent over time."
In determining the pace 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, according to the Fed release.
Fed said the Committee was strongly committed to returning inflation to its 2 per cent objective.
The Board of Governors of the Federal Reserve System is responsible for the discount rate and reserve requirements, and the Federal Open Market Committee is responsible for open market operations.
The Federal Open Market Committee (FOMC) consists of twelve members -- the seven members of the Board of Governors of the Federal Reserve System; the president of the Federal Reserve Bank of New York; and four of the remaining eleven Reserve Bank presidents, who serve one-year terms on a rotating basis
