Federal Reserve Raises Rates by Three-Quarters of a Percentage Point

June 15, 2022

The Federal Reserve recently raised its benchmark interest rate by three-quarters of a percentage point, the largest increase since 1994, as part of its efforts to curb inflation.

The increase by the rate-setting Federal Open Market Committee (FOMC) will push the federal funds rate to a range of 1.5%-1.75%, the highest since March 2020.

In his post-meeting news conference, Fed Chairman Jerome Powell acknowledged that the increase was unusually large and said he does not expect these types of increases to become common. However, Powell also stated that he expects the FOMC July meeting to see an increase of 50 or 75 basis points.

According to the midpoint of the target range of the Fed's expectations, the benchmark rate will end the year at 3.4%, an upward revision of 1.5 percentage points from what was projected in March. The FOMC then predicts the rate rising to 3.8% in 2023, which is one percentage point higher than its March estimate.

This latest increase was supported by all FOMC members with the exception of Kansas City Fed President Esther George, who preferred a half-point increase.