The Federal Reserve has raised interest rates yet again.
Federal Open Market Committee raised interest rates by 0.75 points on Wednesday, marking its third consecutive hike of that size in an effort to curb inflation. Rates now sit in a range between 3% and 3.25% and the committee anticipates additional increases moving forward, with a goal to return inflation to 2%.
“Recent indicators point to modest growth in spending and production,” the Fed said in a statement. “Job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures.”
Federal Reserve chair Jerome Powell said in remarks that the U.S. economy has slowed from its historically high growth rates of 2021, though the labor market has remained tight.
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While inflation has begun to show signs of cooling, consumer prices increased 8.3% in August from a year ago, down from a 40-year high of 9.1% in June and 8.5% growth in July.
Meanwhile, the labor market has remained robust. The U.S. economy added 315,000 jobs in August, just below estimates of 318,000. This number represented a dip from July, which saw 526,000 jobs added. The unemployment rate in August rose to 3.7%. Notable job gains were present across professional and business services, health care, and retail trade. Employment in retail trade increased by 44,000 in August and by 422,000 over the last year.
The announcement from the Fed had little immediate impact on the major stock averages as of Wednesday afternoon. As of shortly after 2 p.m., the Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite were down, though all three averages ticked up afterwards.
