The Federal Reserve in its June meeting on Wednesday raised its key rate 0.75, the steepest single increase in 28 years.
“We at the Fed understand the hardship high inflation is causing. We are strongly committed to bringing inflation back down, and we are moving expeditiously to do so. We have both the tools we need and the resolve it will take to restore price stability on behalf of American families and businesses,’” Federal Reserve Chairman Jerome Powell said. “The economy and the country have been through a lot over the past two-and-a-half years and have proved resilient.
“It is essential that we bring inflation down if we are to have a sustained period of strong labor market conditions that benefit all,” he said.
Inflation remains well above the long-term goal of 2 percent. Measuring the 12 months ending in April, prices rose 6.3 percent. Excluding volatile food and energy categories, core prices rose 4.9 percent. In May, the 12-month change in the Consumer Price Index came in above expectations at 8.6 percent, and the change in the core CPI was 6 percent. Aggregate demand is strong, Powell stated in his remarks, but supply constraints have been larger and longer lasting than anticipated.
“Price pressures have spread to a broad range of goods and services,” he said.
Powell said the board likely would raise the rate another 75 basis points in its July meeting, which was received well by Wall Street.
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