US Fed raises rates at slightly smaller hike, expects ‘ongoing’ increases

The US Federal Reserve yesterday raised rates by 25 basis points to a target range of 4.5-4.75%, it said in a statement following its two-day meeting.

Aligning with market expectations, the rate-setting Federal Open Market Committee boosted the federal funds rate by 0.25 percentage point. That takes it to a target range of 4.5%-4.75%, the highest since October 2007.

In addition, the Fed made four consecutive jumbo 75-bps hikes followed by a 50-bps hike last year, in a bid to temper record high inflation.

The Fed is targeting the hikes to bring down inflation that, despite recent signs of slowing, is still running near its highest level since the early 1980s.

The post-meeting statement noted that inflation “has eased somewhat but remains elevated,” a tweak on previous language.