Federal Reserve Raises Interest Rates By Another .75%

Jerome Powell

On Wednesday, the Federal Reserve announced an interest rate hike of 0.75% to combat the inflation crisis, marking the third consecutive 0.75% increase.

According to a recent report from the Bureau of Labor Statistics, prices rose 0.1% in August and 8.3% over the last year. Core inflation, which excludes volatile gas and energy prices, rose 0.6% in August and 6.3% over the last year.

“Recent indicators point to modest growth in spending and production. Job gains have been robust in recent months, and the unemployment rate has remained low,” the Federal Reserve’s Board of Governors said in a statement. “Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures.”

Federal Reserve Chair Jerome Powell warned that the central bank is committed to bringing inflation down and will continue to raise interest rates.

“The [Federal Open Market Committee] is strongly resolved to bring inflation down to 2%, and we will keep at it until the job is done,” Powell said.

Officials also revised their estimates for rates and economic data, projecting the unemployment rate to rise to 4.4% by next year from its current 3.7% – another sign the U.S. economy has entered a recession.

Additionally, they estimate that U.S. GDP growth will slow to 0.2% for 2022, a drastic cut from the previous estimate of 1.7% in June and comes following two consecutive quarters of negative growth, the traditional definition of a recession.