Federal Reserve Announces Rate Increase

November 2, 2022
A photo of American money

We have a ways to go.

Chair of the Federal Reserve Jerome Powell after the Fed announced a significant rate increase on Wednesday in an attempt to combat inflation.

Why It Matters: The Federal Open Market Committee (representatives from America's Central Bank, who determine monetary policy in the U.S.) raised the Federal Funds Rate – the interest rate banks use to lend to each other – 0.75 percentage point for a fourth time on Wednesday, signaling more increases to come as the Fed tries to combat inflation which is sitting near a four-decade high. Bottom Line: This move impacts the entire U.S. economy, and directly/indirectly impacts borrowing costs (mortgage rates, auto loans, etc.).

Some suggest the Committee signaled that although there are continued rate increases to come, they may not be as high: "The new language in the policy statement is an acknowledgement that the central bank has already done a lot to tighten monetary policy, and a signal it will calibrate future moves to reflect that a lot has already been done that is still rippling through the economy" (Axios).

Press Release on the news: Federal Reserve issues FOMC statement

The Fed orders another jumbo interest rate hike. Many are wondering what's next (NPR)

Watch: It is very premature to be thinking about pausing, says Fed Chair Powell (CNBC)

by Jenna Lee,