Fed Expected To Hike Interest Rate By Half Percentage Point To Curb Inflation

  • On Wednesday, the Federal Reserve is expected to raise interest rates by half of a percentage point and announce the start of reductions to its $9 trillion balance sheet as U.S. central bankers work to combat high inflation.
  • The decision would lift the Fed's short-term target policy rate to 0.75% - 1% and set a plan to trim its Treasuries and mortgage-backed securities portfolio by as much as $95 billion a month, writes Reuters.
  • Markets have priced in further rate increases through this year and into next.
  • "Powell will continue to have a strong incentive to sound hawkish," Piper Sandler economist Roberto Perli said this week. "The Fed's focus these days is 100% on bringing inflation down, and hawkish expectations help that cause."
  • In the run-up to this week's meeting, Powell has said he wants to get rates "expeditiously" to what Fed policymakers regard as a "neutral" range of 2.25%-2.5%, and then higher if needed.
  • Photo via Wikimedia Commons
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