The central bank on Wednesday approved its first increase in interest rate since December 2018 to address an increasing inflation without harming economic growth.
The policymaking Federal Open Market Committee (FOMC) said that it will increase interest rates by a quarter percentage point.
This shift will bring the interest rate now in a range of 0.25%-0.5%. Fed officials indicated that the rate hikes will come with slower economic growth in 2022.
Along with the increase in interest rate, the FOMC committee also hinted about hikes at each of its six remaining meetings in this year. That will lead to full percentage point hike higher than expressed in December. The committee also sees three more possibility of hikes in 2023 and none in 2024.
The rate increase was approved with just one dissent. James Bullard, St. Louis Fed President wanted a 50-basis point hike in interest rate.
Chair of the Fed Reserve, J Powell said at the news conference, “We are attentive to the risks of further upward pressure on inflation and inflation expectations. The committee is determined to take the measures necessary to restore price stability. The U.S. economy is very strong and well-positioned to handle tighter monetary policy.”