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Fed raises interest rate by 0.75 percentage points as US seeks to rein in inflation

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The Federal Reserve announced another sharp hike in interest rates on Wednesday as the central bank struggles to rein in runaway inflation.The Fed raised its benchmark interest rate by 0.75 percentage points, the third such outsized rate increase in a row, bringing the Fed rate to 3%-3.25% and increasing the cost of everything from credit card debt and mortgages to company financing.The central bank signaled more raises to come, predicting rates would reach 4.4% by the end of the year and not start coming down until 2024.

The Fed expects the rate rises to hit the job market – raising unemployment from 3.7% to 4.4% next year – and lower economic growth.Central bankers around the world are raising rates sharply as they too attempt to tackle the cost of living crisis.

This week the Bank of England is expected to announce its largest rate rise in 25 years. The European Central Bank raised interest rates across the eurozone by a record margin earlier this month.The Fed initially dismissed rising inflation, arguing it was a “transitory” phase triggered by the pandemic and supply chain issues.

But as prices escalated the Fed announced a series of aggressive moves in the hopes of bringing prices back under control.Until recently Fed chair Jerome Powell had said he hoped that the economy could achieve what he called a “soft landing” – a slowdown that would bring costs down but not lead to a spike in unemployment and a recession.But in a speech last month Powell said the Fed believes that “some pain” may now be necessary to bring down inflation.“While higher interest rates, slower growth and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses,” he said.Speaking at a

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