Fed raises rates by 75bp

As expected by many, the Federal Reserve raised the target federal funds rate 75bp to 1.5-1.75%.

In a statement with the decision, the Fed said supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures has ciontribued to higher inflation. It also said the invasion of Ukraine is causing, “additional upward pressure on inflation and [is] weighing on global economic activity”. COVID-related lockdowns in China and subsequent supply chain disruptions was also cited.

The Fed also stressed that further rate rises will be “appropriate” and that the Fed FOMC “is strongly committed to returning inflation to its 2 percent objective”.