X

Federal Reserve Raises Interest Rates Again, by Half a Percentage Point

Inflation is slowing, but the Fed isn't pausing on rate hikes yet.

Marcos Cabello
Based in Boston, Marcos Cabello has been a personal finance reporter for NextAdvisor and CNET. Marcos has covered cryptocurrency, investing, banking, and the US economy, among other personal finance subjects. If you don't find Marcos behind his computer screen, you'll probably find him behind another screen, playing the newest Nintendo Switch title, streaming the latest TV show or reading a book on his Kindle.
Marcos Cabello
Photo of Fed Chair Jerome Powell

Federal Reserve Chairman Jerome Powell.

Getty Images

The Federal Reserve on Wednesday announced another interest rate hike, of half a percentage point, ending the year with a total of seven rate increases.

Though still substantial, this latest rate hike was smaller than the past four previous increases of three-quarters of a percentage point. The Fed chairman, Jerome Powell, has consistently said the central bank would dial back its restrictive monetary policy stance once it saw significant progress on inflation, which happened this week. Though consumer prices still remain at record highs, inflation is finally showing signs of cooling, leading the Fed to decrease the intensity of the latest rate hike.

Raising the federal funds rate effectively increases interest rates for consumers, which makes mortgagescredit cards, personal loans and home equity lines of credit more expensive. On the flip side, these rate hikes have also boosted interest rates for high-yield savings accounts and certificates of deposit

"We understand the hardship that high inflation is causing, and we are strongly committed to bringing inflation back down," Powell said during Wednesday's press briefing. "Restoring price stability will likely require maintaining a restrictive policy stance for some time."