The baseline interest rate set by the US Federal Reserve has increased by 0.75 percentage points. New predictions indicate that the Fed’s target policy rate will increase to a range of 4. 25% to 4.50 percent, which is its highest level since 2008.
Since the Federal Reserve formally began aiming to conduct monetary policy at the federal funds rate in the late 1980s, three consecutive rate increases of 75 basis points are unusual.
The rate increase raises the federal funds rate, the benchmark interest rate set by the central bank; the rate starts from its current range of 2. 25% to 2.5% to a new range of 3.0% to 3.25%, which is its highest level since 2008.
Following the news, stocks started to decline before recovering as Federal Reserve Chairman Jerome Powell read prepared remarks, and shortly after that, stocks started to decline again, hitting new lows.