Fed Unveils 75-Basis-Point Rate Hike, Flags Weakening Economic Data

• The Federal Reserve raised its benchmark overnight interest rate by 75 basis points on July 27, 2022 in an effort to cool the most intense breakout of inflation since the 1980s, with "ongoing increases" in borrowing costs still ahead despite evidence of a slowing economy. 
• Coming on top of a 75-basis-point hike last month and smaller moves in May and March, the Fed has raised its policy rate by a total of 225 basis points this year as it battles a 1980s-level breakout of inflation with 1980s-style monetary policy.
• The policy rate is now at the level most Fed officials feel has a neutral economic impact, in effect marking the end of pandemic-era efforts to encourage household and business spending with cheap money. The rate also matches the high point of the central bank's previous tightening cycle from late 2015 to late 2018, a level reached this time in the span of just four months.
• The Fed Chair stated that, “While another unusually large increase could be appropriate at our next meeting, that will depend on the data between now and then.” Forecasts in mid-June showed officials expected to raise rates to about 3.4% this year and 3.8% in 2023.

(Source: Reuters.com)