This increase is smaller than the four previous 75 basis point increases but is still a notable increase, putting the range at 4.25-4.5 percent
Casey Harper
The Center Square
The U.S. Federal Reserve announced a new rate increase of half a percentage point Wednesday in its ongoing effort to curb inflation.
The Fed raised the rate by 50 basis points, as expected, the seventh rate hike this year. This increase is smaller than the four previous 75 basis point increases but is still a notable increase, putting the range at 4.25%-4.5%.
“Recent indicators point to modest growth in spending and production. Job gains have been robust in recent months, and the unemployment rate has remained low,” the Fed said. “Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures.”
The Fed blamed the Russian war in Ukraine for the price hikes. That war delayed the supply chain and increased costs, but the price increases began long before that war, due in part to trillions of dollars in federal debt spending since the pandemic began.
“The war and related events are contributing to upward pressure on inflation and are weighing on global economic activity,” the group said. “The Committee is highly attentive to inflation risks. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run.”
The increase comes in response to inflation, which has soared during President Joe Biden’s term. The latest federal inflation data shows that those price increases have slowed but not stopped entirely.
Economists say these rate hikes help curb inflation but have negative economic consequences. Raising rates too much too fast can send the economy into a recession.
“We expect that as the Fed moves closer to its terminal rate the market will shift more directly towards growth, especially if valuations become compelling if the market sells off as the economy slows,” said Quincy Krosby, chief global strategist for LPL Financial.
Analysts say the U.S. economy and the possibility of a recession are still in flux.
“Though yesterday’s CPI report was encouraging, we believe the market has overreacted to an easing of inflationary pressures,” said John Lynch, Chief Investment Officer for Comerica Wealth Management. “A drop from 9.0% to 7.0% is likely the easiest of the 200 basis point moves lower that investors hope for … we suspect the next 200 basis point reduction will be much more difficult to achieve as wages, housing and energy prove stickier than consensus believes. Moreover, while the move lower in market interest rates has been received warmly by investors, balance sheet reduction remains a wildcard and may provide further upward pressure on market interest rates in 2023.”
This report was first published by The Center Square.
Also read:
- Opinion: Transit agencies need accountability not increased state subsidy
Charles Prestrud argues that Washington transit agencies face rising costs and declining ridership due to governance structures that lack public accountability. - Letter: ‘For years, American foreign policy too often felt like a blank check’
Vancouver resident Peter Bracchi argues that the 2025 National Security Strategy marks a long-overdue shift toward clearer priorities, shared responsibility, and interest-based American leadership. - POLL: Are you better off than you were a year ago?
This week’s poll asks readers to reflect on their personal financial situation and whether they feel better off than they were a year ago as economic conditions continue to shift. - Opinion: Does tailgating cause speeding?
Target Zero Manager Doug Dahl examines whether tailgating contributes to speeding and explains why following too closely increases crash risk with little benefit. - Opinion: ‘The Democrats’ part of the bargain’
Clark County Today Editor Ken Vance reflects on a New Year’s Eve encounter and a Bill Maher commentary to assess what he sees as cultural and political changes from the past year. - Free fares on New Year’s Eve is a big hit with C-TRAN riders
C-TRAN’s New Year’s Eve free-fare program provided extended late-night service and a safe transportation option for riders across Clark County just after midnight. - Opinion: A year in review of news stories from a former sports guy
Clark County Today reporter Paul Valencia reflects on his evolving role, revisiting major news, community debates, sports moments, and human-interest stories that shaped Clark County in 2025.
wpDiscuz
