NATIONAL NEWS

Fed begins inflation fight with key rate hike, more to come

Mar 16, 2022, 12:07 PM | Updated: Jun 13, 2022, 3:38 pm

Federal Reserve Chairman Jerome Powell testifies during the Senate Banking Committee hearing titled...

Federal Reserve Chairman Jerome Powell testifies during the Senate Banking Committee hearing titled “The Semiannual Monetary Policy Report to the Congress” in Dirksen Building in Washington, D.C., on Thursday, March 3, 2022. (Tom Williams/CQ Roll Call)

(Tom Williams/CQ Roll Call)

WASHINGTON (AP) — The Federal Reserve launched a high-risk effort Wednesday to tame the worst inflation since the 1970s, raising its benchmark short-term interest rate and signaling potentially up to seven rate hikes this year.

The Fed’s quarter-point hike in its key rate, which it had pinned near zero since the pandemic recession struck two years ago, marks the start of its effort to curb the high inflation that has followed the recovery from the recession. The rate hikes will eventually mean higher loan rates for many consumers and businesses.

The central bank’s policymakers expect inflation to remain elevated and to end 2022 at 4.3%, according to updated quarterly projections they released Wednesday. That’s far above the Fed’s 2% annual target. The officials also now forecast much slower economic growth this year, of 2.8%, down from its 4% estimate in December.

Chair Jerome Powell is steering the Fed into a sharp U-turn. Officials had kept rates ultra-low to support growth and hiring during the recession and its aftermath. As recently as December, Fed officials had expected to raise rates just three times this year. Now, its projected seven hikes would raise its short-term rate to 1.875% at the end of 2022. It could increase rates by a half-point at future meetings.

Fed officials also forecast four additional hikes in 2023, boosting its benchmark rate to 2.8%. That would be the highest level since March 2008. Borrowing costs for mortgage loans, credit cards and auto loans will likely rise as a result.

Powell is hoping that the rate hikes will achieve a difficult and narrow objective: Raising borrowing costs enough to slow growth and tame high inflation, yet not so much as to topple the economy into recession.

Yet many economists worry that with inflation already so high — it reached 7.9% in February, the worst in four decades — and with Russia’s invasion of Ukraine driving up gas prices, the Fed may have to raise rates even higher than it now expects and potentially tip the economy into recession.

By its own admission, the central bank underestimated the breadth and persistence of high inflation after the pandemic struck. Many economists say the Fed made its task riskier by waiting too long to begin raising rates.

KSL 5 TV Live

National News

A new draft law looks to prohibit the breeding of dogs with “skeletal anomalies,” such as dachs...

Nadine Schmidt, Claudia Otto and Frederik Pleitgen, CNN

Dachshunds under threat as Germany proposes ban on breeding

No more dachshunds? A new draft law looks to prohibit the breeding of dogs with “skeletal anomalies.”

1 hour ago

The cargo ship Dali sits in the water after running into and collapsing the Francis Scott Key Bridg...

Nick Perry

What to know about the cargo ship Dali, a mid-sized ocean monster that took down a Baltimore bridge

Here’s what to know about the cargo ship Dali, which crashed into Baltimore’s Francis Scott Key Bridge, causing it to collapse and leaving six construction workers presumed dead.

3 hours ago

The ocean liner's demise remains a point of cultural fascination, more than a century later. (Movie...

Taylor Nicioli

This controversial ‘Titanic’ prop sold for more than $700,000 at a memorabilia auction

A door – or more accurately doorframe – from the 1997 movie "Titanic" sold for $718,000 at a Dallas auction.

4 hours ago

Workers continue to investigate and search for victims after the cargo ship Dali collided with the ...

Ben Finely

Debate emerges over whether modern protections could have saved Baltimore bridge

A debate has emerged over whether modern safety protections could have saved a Baltimore bridge after it was struck by a cargo ship.

5 hours ago

Alison Smart and her daughter Ruby, Alison Smart is going up against a major drug company, trying t...

Daniel Woodruff

Utah mom enlists Mark Cuban in fight for daughter’s access to insulin

A Utah mom is going up against a major drug company, trying to keep a type of insulin on the market that she says is essential for her family.

17 hours ago

FILE - In this Wednesday, Aug. 1, 2007 picture, vehicles are scattered along the broken remains of ...

Trisha Ahmed and Valerie Gonzalez, Associated Press

Driving along … and the roadway vanishes beneath you. What’s it like to survive a bridge collapse?

What's it like to survive a bridge collapse? Survivors of past bridge failures in Minnesota and Texas tell The Associated Press that the collapse of the Francis Scott Key Bridge in Baltimore brings back harrowing memories of their own ordeals.

17 hours ago

Sponsored Articles

Women hold card for scanning key card to access Photocopier Security system concept...

Les Olson

Why Printer Security Should Be Top of Mind for Your Business

Connected printers have vulnerable endpoints that are an easy target for cyber thieves. Protect your business with these tips.

Modern chandelier hanging from a white slanted ceiling with windows in the backgruond...

Lighting Design

Light Up Your Home With These Top Lighting Trends for 2024

Check out the latest lighting design trends for 2024 and tips on how you can incorporate them into your home.

Technician woman fixing hardware of desktop computer. Close up....

PC Laptops

Tips for Hassle-Free Computer Repairs

Experiencing a glitch in your computer can be frustrating, but with these tips you can have your computer repaired without the stress.

Close up of finger on keyboard button with number 11 logo...

PC Laptops

7 Reasons Why You Should Upgrade Your Laptop to Windows 11

Explore the benefits of upgrading to Windows 11 for a smoother, more secure, and feature-packed computing experience.

Stylish room interior with beautiful Christmas tree and decorative fireplace...

Lighting Design

Create a Festive Home with Our Easy-to-Follow Holiday Prep Guide

Get ready for festive celebrations! Discover expert tips to prepare your home for the holidays, creating a warm and welcoming atmosphere for unforgettable moments.

Battery low message on mobile device screen. Internet and technology concept...

PC Laptops

9 Tips to Get More Power Out of Your Laptop Battery

Get more power out of your laptop battery and help it last longer by implementing some of these tips from our guide.

Fed begins inflation fight with key rate hike, more to come