The Federal Reserve moderated its all-out drive to cool inflation on Wednesday, lifting its benchmark lending rate by half a percentage point as its policy actions weigh on the economy.
The increase takes the rate to 4.25-4.50 percent, the highest since 2007, but officials noted that their battle to cool the world’s largest economy is far from over.
“The committee anticipates that continued increases in the target range will be appropriate” to achieve a sufficiently restrictive stance to curb inflation, the Fed’s Federal Open Market Committee (FOMC) said in a statement.
The committee anticipates that its rate for next year will also be higher than expected.
On Wednesday, policymakers also cut their forecast for US economic growth next year to 0.5 percent, narrowly avoiding a contraction and seeing inflation rise more than expected.
The Fed has raised rates seven times this year to try to ease demand and reduce rising inflation, with interest-sensitive sectors such as housing already recovering from policy tightening.
Wednesday’s smaller hike marks a step below the four 0.75-point rate hikes in a row earlier this year, but it’s still a big jump.
While policy takes time to affect different sectors, there have been positive signs recently, with US consumer inflation easing in November.
We live in a world where fact and fiction blur
In times of uncertainty, reliable journalism is needed. For 14 days free, you can have access to a world of in-depth analysis, investigative journalism, featured opinions and a host of features. Journalism strengthens democracy. Invest in the future today. From then on, you will be billed R$75 per month. You can cancel at any time and if you cancel within 14 days you will not be billed.