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After a good few months of um-ing and ah-ing about what to do about the record-high levels of inflation, the Fed has voted on Wednesday 8-1 in favor of raising interest rates on government loans by about a quarter percent. This is after two years of near-zero rates aimed to protect the economy during the pandemic.
“The American economy is very strong and well-positioned to handle tighter monetary policy,” said Fed Chair Jerome Powell after the vote. “I saw a committee that is acutely aware of the need to return the economy to price stability.”
“This is going to be a pretty aggressive tightening cycle. I don’t know if the Fed is going to pull off a soft landing,” said Ryan Sweet, the guy in charge of monetary policy research at Moody’s Analytics. “It’s very clear the Fed is more than doubling down on addressing inflation.”