Today, Wednesday, was the last meeting of the Federal Reserve Open Market Committee before the mid-term elections next week, and it approved a fourth consecutive rate hike of three-quarters of a percentage point as part of its strategy to reduce the high inflation that is impacting the US economy.
The new increase now takes the central bank’s reference interest rate to a new target range of 3.75% to 4%. That’s the highest fed funds rate since January 2008.
Today’s decision marks the Fed’s toughest hike since the 1980 and will likely deepen the economic impact on millions of American businesses and families by driving up the cost of debt even higher.
This action increases the probability of triggering a recession. Given this, Fed President Jerome Powell said that rising inflation would bring a greater negative economic impact than a recession, although he also acknowledged that the impact of this monetary policy has created great economic difficulties.