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The Federal Reserve raised the benchmark interest rate by 75 basis points Wednesday, the largest rate hike since November 1994, as part of efforts to tame soaring inflation.
Federal Open Market Committee (FOMC) officials agreed to increase the Fed funds target range to 1.5 percent and 1.75 percent. This is the rate that banks charge each other for overnight borrowing, affecting consumer borrowing, such as credit cards and home equity loans.
Before the latest headline inflation reading, the Fed forward guidance had penciled in a 50-basis-point rate hike in June. Investors had been pricing in this level, but a red-hot consumer price index (CPI) prompted the market to alter its expectation and forecast a more hawkish central bank.
The Fed raised interest rates by 25 basis points in March, marking the first increase since 2018. Additionally, rates were increased by a half percentage point last month.
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