Fed Raises Rates By Half Point, Starts Balance Sheet Reduction June 1

• The Federal Reserve on Wednesday raised its benchmark overnight interest rate by half a percentage point, the biggest jump in 22 years, and the U.S. central bank's chief made a direct appeal to Americans struggling with high inflation to hang tough while officials take the hard measures to bring it under control. 
• In a widely expected move, the Fed set its target federal funds rate to a range between 0.75% and 1% in a unanimous decision, with further rises in borrowing costs of perhaps similar magnitude likely to follow. Fed Chair Jerome Powell, however, told reporters that a rate increase of as much as three-quarters of a percentage point is not something officials are "actively considering." 
• The Fed also said starting next month, it would reduce the roughly $9 trillion stash of assets accumulated during the coronavirus pandemic in another lever to bring inflation under control. 
• Powell, speaking in a news conference after the end of the Fed's latest two-day policy meeting, said he and his colleagues were determined to restore price stability but that doing so would entail higher borrowing costs, including for things like mortgages and car loans. 
• Nonetheless, the Fed said the economy is continuing to perform well, and Powell said it is well-positioned to withstand the coming rate hikes, which are likely to be of a magnitude more like the one announced on Wednesday. 
• Despite a drop in GDP over the first three months of this year, "household spending and business fixed investment remain strong. Job gains have been robust," the central bank's Federal Open Market Committee said in its policy statement.

(Source: CNBC News)