At the conclusion of its December policy meeting on Wednesday, the Federal Reserve hiked federal interest rates by a half-point increase, bringing the rate to its highest point in 15 years, CNBC reports.
The news: The New York Times reports that while the federal interest rate is currently sitting at a record high, this is the smallest increase since May.
- The Fed had increased interest rates by three-quarter-point hikes each time for the past four rate hikes, per CNN.
- The Times adds that slower rate hikes from the Fed were expected for months.
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The bigger picture: In a statement following the policy meeting, the Federal Reserve stated that these interest hikes are made with the goal of bringing inflation down to a healthy rate of 2 %. The current inflation rate is sitting at 7.1%, according to the latest Consumer Price Index Summary.
- This increase took the interest rate from 41⁄4% to 41⁄2%, the Fed added.
- Although inflation is still high, the Fed adds that the economic state of the country seems to be recovering from the pandemic.
- However, the Fed stated that “inflation remains elevated,” and that the committee will be prepared to “adjust the stance of monetary policy as appropriate” to achieve its goals of reducing inflation rates.