For the first time in more than 3 years, the Federal Reserve is raising interest rates. The central bank made the announcement March 16 at the conclusion of its monetary policy meeting.
— For the first time in more than three years, the Federal Reserve is raising interest rates. The central bank made the announcement March 16 at the conclusion of its highly anticipated two-day monetary policy meeting.
This is the first rate increase since December 2018 and the first time rates have moved from their level of near zero since the bank slashed them almost exactly two years ago in March 2020 in the wake of the COVID pandemic. But during the pandemic, prices have risen on the back of high demand, supply chain chaos and higher energy costs. Initially, Powell referred to the pandemic inflation as “transitory” before retiring the use of the term during a Congressional hearing last November.
Meanwhile, the US labor market recovery has come along swiftly following the shock of the spring 2020 shutdown, which marked the largest job loss in history. As of February, the nation was still short 2.1 million jobs compared with the same month two years earlier.Between the strong job market and high inflation only half of the Fed’s mandate is fulfilled.