The U.S. Federal Reserve announced on June 15, local time, that it would raise the benchmark interest rate by 75 basis points to an annual level of 1.5-1.75%. This is the largest rate hike by the Fed since 1994.
On June 16, Fed Chairman Powell said that inflation had unexpectedly risen since the Fed’s May meeting. In response, the Fed decided to significantly raise interest rates, which will help ensure long-term inflation expectations remain stable.
He also said that the next few months will be looking for strong evidence of falling inflation, the next meeting is most likely to raise interest rates by 50 basis points or 75 basis points, and the move of raising interest rates by 75 basis points is not expected to become the norm.
So far, the Fed has raised interest rates three times in a row this year, raising interest rates by 25 basis points in March and 50 basis points in May. In March, the Fed raised its target range for the federal funds rate by 25 basis points from near zero, kicking off a tightening cycle to curb inflation. In early May, the Federal Reserve announced another 50 basis point rate hike.