The Federal Reserve has just made its most aggressive move in the ongoing fight against surging inflation that is at its highest in the last 40 years. On Wednesday, the Fed announced an interest rate hike of 0.75 percentage point, marking the most significant spike since 1994.
During a press conference on Wednesday, Federal Reserve chairman Jerome Powell said that he doesn’t “expect moves of this size to be common.” However, he didn’t exclude another similar hike in the future unless the officials see “progress.”
“It is essential that we bring inflation down if we are to have a sustained period of strong labor market conditions that benefit all,” said Powell.
Eight out of 18 Federal Open Market Committee officials expect that 2022 will wrap up with a fed funds rate of 3.4 percent. Five believe it will be higher, while the remaining five members see it at around 3.2 percent.
In the long-term, the interest rate hike should flatten the inflation and get the economy in check. However, it will likely result in some undesirable short-term consequences for an average American. Some of these include layoffs, a tougher path to home ownership, and even higher food and gasoline prices.
