US Fed hikes interest rate by 75 bps, biggest since 1994

United States Federal Reserve’s Federal Open Market Committee (FOMC) announced on Wednesday that it will increase the target range for the federal funds rate to between 1.5% and 1.75%. The 0.75 percentage point rate hike is Fed’s biggest in 28 years.

“Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures,” as well as the Ukraine crisis and the lockdowns in China, which “are likely to exacerbate supply chain disruptions,” the Fed said in its monetary policy statement. The central bank reaffirmed its commitment to reducing its balance sheet and “to returning inflation to its 2 percent objective.”