The Federal Reserve raised its benchmark interest rate by 3/4 of a percentage point Thursday to the highest it has been since 2008, according to CNBC. The rate hovered around zero this past March, but has increased a total of 3.75 percentage points over the last eight months. Stocks fell drastically as a result of the announcement.
“Interest rates have risen at a whiplash-inducing speed, and we’re not done yet,” Greg McBride, chief financial analyst at Bankrate, told NPR. “It’s going to take some time for inflation to come down from these lofty levels, even once we do start to see some improvement.”
Fed Chairman Jerome Powell also echoed that though rates are high, they are still not high enough to quell such severe inflation, stating Thursday that there is “some ground to cover […] before we get to that level that we think is sufficiently restrictive.” Powell did say the pace of rate increases will likely slow down in the near future, as he and other policymakers consider the economic impact of higher borrowing costs.
Many experts anticipate another half point rate jump in December, followed by several potential small hikes next year; however, they say the increases have failed to actually curb inflation.
With the most recent rate hike, the federal government implied it may implement changes that would “take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments,” as outlined in a statement released Thursday.