Fed expected to intensify inflation fight with 75-basis point rate hike

Central bank could approve first 75-basis point rate hike since 1994

Megan Henney / FOXBusiness

 

The Federal Reserve is expected to ratchet up its fight to tame scorching-hot inflation on Wednesday with the first 75-basis point rate hike in close to three decades, a move that threatens to slow U.S. economic growth and exacerbate financial pressure on Americans.  

With inflation unexpectedly accelerating to a fresh 40-year high in May, the Fed is under mounting

Central bank policymakers raised the benchmark interest rate by a half-percentage point – double the typical size – in May, and laid out a roadmap for similarly sized increases at their meetings in June and July, assuming that data evolved as expected. But a string of alarming inflation reports in recent weeks could force the Fed to shift course.

A dismal Labor Department report last week showed the consumer price index rose 8.6% in May from a year ago, faster than expected. It marks the fastest pace of inflation since December 1981 and dashes economists' hopes that the consumer price spike was starting to fade. And a different survey released Monday showed that households are bracing for notably faster price increases – a worrisome sign because Fed officials believe such expectations can be self-fulfilling. Read more, see charts and video here.