Federal Reserve to raise interest rates for the second time since 2018
WASHINGTON (KDKA) - Today, the Federal Reserve is expected to raise interest rates for the second time since 2018.
It's a move that will boost the fed funds target rate by a half-percentage point. This is the largest rate hike in more than two decades.
So, why are they raising interest rates?
The central bank reports that they're worried prices are climbing too fast as people continue to spend money, like on shopping and vacations. Demand is so strong that it's outpacing what businesses can deliver, especially with the supply chain issues and companies struggling to find enough workers.
The fed is hoping to lessen the demand and ease inflation by making it more expensive to borrow money.
"This is a situation where wages have moved up at the highest rate in a very long time and people are able to quit their jobs and move to better-paying jobs," said Federal Reserve Chairman, Jerome Powell.
They don't want to slow a strong U.S. economy into recession.
"They have to push up the unemployment rate and in the past when you pushed up the unemployment rate, you've almost never been able to avoid a full-fledged recession," said the former President & CEO of the Federal Reserve Bank of New York, Bill Dudley.
The central bank is also expected to launch a program to reduce its bond holdings by $95 billion a month, starting in June.
Federal Reserve Chairman, Jerome Powell, will be releasing a statement today and is expected to brief the media this afternoon.