US Fed steeply raises interest rates, to shrink balance sheet

Fed chair Jerome Powell told a news conference that further large rate hikes are coming. He said additional half-point increases in the Fed’s key rate “should be on the table in the next couple of meetings” in June and July.

“A 75-basis-point hike is not something that the committee is actively considering,” he was quoted as saying by US media reports.

The US central bank will start allowing its holdings of treasuries and mortgage-backed securities to roll off in June at an initial combined monthly pace of $47.5 billion, stepping up over three months to $95 billion.

“The committee is highly attentive to inflation risks,” the Fed said in a statement, referring to COVID-related lockdowns in China that “are likely to exacerbate supply chain disruptions.”

That is in addition to Russia’s invasion of Ukraine and related events, which are “creating additional upward pressure on inflation and are likely to weigh on economic activity.”

ALCHEMPro News Desk (DS)