The Federal Reserve announced Wednesday it had raised its key interest rates by another 0.25 points, increasing the federal funds rate range to a 22-year high of 5.25% to 5.5%, the highest level in 22 years. This is the 11th Fed interest rate increase since March 2022.

In a statement Wednesday afternoon, the Federal Reserve said that while consumer prices have declined for 12 straight months, consumer prices increased 3% year on year in June. Inflation remains elevated and job gains have been robust while unemployment has remained low. By raising its interest rates, the Federal Reserve hopes to make borrowing and investing more expensive, thereby reducing overall demand for goods, services and labor in the economy.  However, Wednesday’s rate increase will make it harder still for consumers and business to afford loans.

Fed Chair Jerome Powell affirmed after Wednesday’s interest rate announcement that the central bank no longer expects a recession to occur as a result of the increases, adding that it could bump up the key interest rate even further. The Federal Reserve’s statement said it “seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the committee decided to raise the target range for the federal funds rate to 5-1/4 to 5-1/2 percent.”  As it continues to monitor inflation there’s a possibility of yet another interest rate hike ahead. the Fed said it will “continue to assess additional information and its implications for monetary policy.”

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