The Federal Reserve Could Soon Raise Interest Rates

When the Federal Reserve's new-found freedom allows it, it could increase interest rates by 50 or 75 bps as

The first paragraph tells the reader about the main subject of the article.

Federal Reserve officials reiterated their commitment to fighting inflation with big interest rate increases, and promised to use "more restrictive policy" if the risk of high consumer prices becoming entrenched for a longer time was deemed "significant", according to the minutes from the central bank's latest meeting.

   Fed officials could raise rates by 50 or 75 basis points later this month.  
  Kevin Wolf/Associated Press
Fed officials could raise rates by up to 50 or 75 basis points later this month.

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In the latest Fed minutes, it was stated that "participants concurred that the economic outlook warranted moving to a restrictive stance of policy" and that "an even more restrictive stance could be appropriate if elevated inflation pressures were to persist."

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The Fed last raised interest rates by 75 basis points in June—the largest increase in 28 years—in an attempt to fight high consumer prices, which rose 8.6% year-over-year in May. Fed Chair Jerome Powell said at the time that the central bank will continue to hike rates aggressively, with another 75-basis-point increase possible for its next meeting in July.

What to watch for:

"What markets want to hear now," says Quincy Krosby, chief equity strategist for LPL Financial, "is what the Fed has in mind if economic data releases continue to signal a deeper and more serious downturn without a commensurate easing in inflation. And what markets hope for is that by the next meeting inflation is on its way towards plateauing, indicating that although behind the curve initially, the Fed's restrictive policy is indeed working."

Last time the Fed increased rates by 75 basis points, the markets reacted in this way (Forbes).

Dow Jumps 300 Points After Powell Says Fed Could Hike Rates By 75 Basis Points Again In July (Forbes)