US Fed raises Interest Rates by half-point

The US Federal Reserve

in a bid to effectively tackle the highest inflation in the past forty years has increased its benchmark interest rate by a half percentage point. This is the highest increase in the rate of interest since 2000.

After a policy meeting, the Fed in a statement said that the policy-making body of the US Federal Reserve, the Federal Open Market Committee (FOMC), decided to hike the target range for the federal funds rate to 0.75 to 1 percent.

As per a report by Xinhua news agency,

the committee also decided to start decreasing its holdings of Treasury securities and agency debt, and agency mortgage-backed securities on June 1.

The US Federal said, "Although overall economic activity edged down in the first quarter, household spending and business fixed investment remained strong. Job gains have been robust in recent months, and the unemployment rate has declined substantially. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures."

The Fed further informed that the ongoing Russia-Ukraine conflict and related events are creating "additional upward pressure" on inflation and are likely to affect economic activity.