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

July 27, 2022

The Federal Reserve recently issued its second consecutive 0.75 percentage point interest rate increase as part of its efforts to reduce inflation.

The rate-setting Federal Open Market Committee (FOMC) raised the benchmark overnight borrowing rate to a range of 2.25%-2.5%. The increase brings the funds rate to its highest level since December 2018.

In its post-meeting statement, the FOMC stated that recent indicators of spending and production have softened while acknowledging job gains and the low unemployment rate. Officials described inflation as “elevated,” citing supply chain issues, higher prices for food and energy, and broader price pressures as causes.

The latest rate increase was approved unanimously. At the June meeting, Kansas City Fed President Esther George dissented, preferring a half percentage point increase.

The Fed is expected to raise rates at least another half percentage point at its next meeting in September.