Historical Interest Rate Increase from FED

The US Federal Reserve (FED) decided to increase the policy rate by 75 basis points. The institution, which has implemented such a tightening policy for the first time in 28 years, once again repeated its message that the first priority is the fight against inflation.

Historical Interest Rate Increase from FED. The US Federal Reserve (FED), exceeding market expectations, increased the policy rate by 75 basis points at its June meeting. Making an announcement after the decision, which was recorded as the highest interest rate increase in the last 28 years, FED Chairman Jerome Powell said, “We have a very clear picture before us. "The job market is incredibly tight and inflation is very high." Fed officials signaled that the rate hike would continue and stated that the increase could reach 175 basis points by the end of the year. In the text of the decision, which increased the policy interest rate to between 1.50-1.75 percent, it was stated that they were determined to return to the 2 percent inflation target. In addition, it was stated that the Fed will continue to reduce its Treasury bonds and mortgage-backed securities. The US Federal Reserve also revised its expectations for economic indicators. Accordingly, the growth expectation, which was 2.8 percent in March, was withdrawn to 1.7 percent at this meeting. 2023 growth expectation is from 2.2 percent to 1.7 percent; The 2024 expectation was reduced from 2 percent to 1.9 percent. Unemployment Expectation Revised Upward The Fed said it raised its unemployment forecast for this year from 3.5 percent to 3.7 percent. While the 2023 unemployment expectation was increased from 3.5 percent to 3.9 percent, the 2024 expectation was recorded as 4.1 percent with an increase of half a point. After the decision, Fed Chairman Jerome Powell said: "The country's economy has been through a lot in the last two and a half years and has proven to be resilient. In line with our maximum employment and price stability targets set by Congress, we have a very clear picture ahead of us right now. The job market is incredibly tight and inflation is very high. We saw growth this quarter and consumption remained very strong. On the contrary, growth in investments slowed down. Activity in the real estate sector also began to soften. Unemployment is at a nearly 50-year low and wage growth has soared. Improvements in the job market spread to the grassroots. Both job demand and labor demand are strong. Supply problems lingered longer than expected, and price pressures spread across many goods and services. The rise in crude oil and other commodity prices is due to Russia's invasion of Ukraine. It also pushes inflation upwards by pushing up food and energy prices."