The Federal Reserve raised its rate on Wednesday by 0.75 percentage points for the second month in a row in the largest single-meeting rate increase since 1994.
The Federal Open Market Committee decided following its two-day policy meeting to raise short-term borrowing rates to between 2.25 percent and 2.50 percent, comparable to the 2019 levels.
The move comes as America’s central bank attempts to blunt the growing likelihood of a recession.
In its announcement, the Fed noted, “Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures,” adding that it “anticipates that ongoing increases in the target range will be appropriate.”
The increase means it will cost more for Americans to obtain a mortgage, take out a loan, and purchase essentials for the family.
Last month the US inflation rate rose to 9.1 percent from 8.6 percent in May, the highest rate since November 1981.