By Ketki Saxena
Investing.com -- The U.S. Federal Reserve raised its benchmark overnight interest rate by three-quarters of a percentage point or 75 basis points in a move that was widely expected, taking the U.S. Central bank’s policy rate to range of between 2.25% and 2.50%.
The rate increase received a unanimous vote from the 12-member rate-setting Federal Open Market Committee.
The central bank is seeking to tame inflation that remains at a four decade high, which it now aims to tackle forcefully to prevent soaring prices becoming entrenched - despite mounting evidence of a slowing economy.
In its statement, the FOMC noted that "Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures," even as “"recent indicators of spending and production have softened”.
Following a similar 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, effectively marking the end of pandemic-era spending and returning the policy rate to a neutral stance.