The Federal Reserve announced it is hiking the interest rate by 0.75% as it attempts to slow down the rapidly rising increase in inflation and prevent a looming recession.
The second consecutive 0.75% increase brings the interest rates to a range of 2.25%-2.5%.
"Recent indicators of spending and production have softened. Nonetheless, job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures," the Federal Open Market Committee said in a statement announcing the rate hikes.
"Russia's war against Ukraine is causing tremendous human and economic hardship. The war and related events are creating additional upward pressure on inflation and are weighing on global economic activity. The Committee is highly attentive to inflation risks," the statement continued.
Federal Reserve Chair Jerome Powell suggested the Fed will continue to be aggressive to fight inflation.
“From the standpoint of our Congressional mandate to support maximum employment and price stability, the current picture is plain to see: The labor market is extremely tight, and inflation is much too high,” Powell said.
“While another unusually large increase could be appropriate at our next meeting that is a decision that will depend on the data we get between now and then,” he added.
The stock market was up ahead of the expected announcement, buoyed by strong quarterly reports from Google-parent Alphabet and Microsoft. The markets remained steady after the announcement and finished the day in the black. The Dow Jones Industrial Average closed up by 436 points while the Nasdaq and S&P 500 finished up by 496 points and 102 points, respectively.