Federal Reserve raises key interest rate to 22-year high 

by John Yellig

The Federal Reserve raised its key benchmark interest rate a quarter point to 5.5%, stating that although inflation has eased from previous highs, it remains above the central bank’s 2% target. 

The new rate is the highest it’s been in 22 years and follows a string of rate hikes that began in March 2022, when it was almost zero. 

“In determining the extent of additional policy firming that may be appropriate to return inflation to 2% over time, the [Federal Open Market] Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation and economic and financial developments,” the Fed said in an announcement, noting that it would continue to unload Treasury securities, agency debt and mortgage-backed securities. 

In a statement, National Association of REALTORS® Chief Economist Lawrence Yun took issue with the increase. 

“The fed funds rate is now two percentage points higher than inflation, a rare and very tight monetary policy condition,” Yun said. “Inflation is much calmer at 3% compared to 9% last summer. All the while, because of higher interest rates, home sales have fallen, businesses are cutting back on investments, and community banks are under stress.” 

Looking ahead, the Fed did not rule out future rate increases, stating that it will “would be prepared to adjust the stance of monetary policy as appropriate.”  

Read More Related to This Post

Join the conversation

Oops! We could not locate your form.