The Federal Reserve Board (FRB) decided at the FOMC meeting on the 16th to raise the policy rate by 0.25% to 3.75–4.00%. The first rate hike in 3 years signals a policy shift aimed at avoiding a prolonged rise in prices.
On the 16th, the Federal Reserve Board (FRB) raised the policy rate by 0.25% at the Federal Open Market Committee (FOMC) meeting, setting it at 3.75% to 4.00%. The hike was the first since July 2023 and the first in 3 years and 2 months, marking a shift aimed at curbing inflation.
The interest-rate projections of FOMC participants assume one more rate hike later this year. While employment remains firm, the Fed emphasized its stance of avoiding a prolonged period of high prices. It also expressed concern about energy-price trends against the backdrop of the situation in the Middle East and other factors.
The European Central Bank (ECB) decided on an additional rate hike on the 10th, while the Bank of Japan is expected to raise its policy rate by 0.25% at its meeting on the 17th and 18th. Major central banks are moving in step toward tighter policy.
The FRB’s decision was unanimous. The statement said that economic activity continues to expand solidly, while uncertainty remains elevated. The reason given for the rate hike was “to bring inflation back to the 2% target promptly.”