Federal Reserve Raises Interest Rates by Half-Point in Biggest Hike Since 2000

Headline Roundup May 4th, 2022

The Federal Reserve on Wednesday raised its benchmark interest rate by half a percentage point, marking the largest interest hike since 2000.

Following a quarter-point increase in March, the move marks a shift in strategy as the Fed tackles a 40-year high in inflation. "Inflation is much too high, and we understand the hardship it is causing," Fed Chairman Jerome Powell said. "And we're moving expeditiously to bring it back down." While Powell emphasized that the Fed would not raise interest rates higher than half a percentage point at a time, he hinted that two additional boosts could be warranted in June and July given the current state of the economy.

Some voices across the spectrum expressed concern that the move could trigger an economic recession. New York Magazine (Left bias) accentuated how the central bank has "essentially put the economy in reverse and jammed on the accelerator in a bid to speed away from inflation." The outlet also predicted that consumers will "probably stop spending so much and then it will get harder for businesses to pay for goods and make payroll" since credit will get more expensive. The Daily Wire (Right bias) highlighted how the Biden administration is "struggling to curb inflation without jeopardizing economic growth." They also emphasized how Powell insisted that inflation was "transitory" and not a threat to the economy about a year ago but later "ate his words." Axios (Center bias) noted that Powell is "putting the problem squarely on his own shoulders" and is "moving fast" to make up for his delayed response.

From the Right
302
ANALYSIS

The Federal Reserve raised its benchmark interest rate by a half-point Wednesday, in a strong, but expected move to slow surging inflation even as economic growth went negative in the first quarter.

The central bank is expected to continue raising the rate through the end of the year after holding it at or near zero for several years. It normally raises or lowers the rate in quarter-point increments, and the half-point increase, which followed a quarter-point boost in March, was the biggest jump since May, 2000. The current federal funds target rate is between...

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From the Center
302
ANALYSIS

The two most striking moments of Federal Reserve chair Jerome Powell's news conference Wednesday came at the very beginning and near the end.

He started the session by staring into the camera and telling the American people that inflation is too high and the Fed is determined to bring it down. Later, when asked a question about what other branches of government could do to fight inflation, he demurred, essentially saying inflation is the Fed's problem to solve.

Why it matters: The Fed may be late in attempting to bring down...

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From the Left
302
ANALYSIS

The Federal Reserve pushed up the odds that the country will fall into a recession on Wednesday when it tightened up the flow of money in the most aggressive move in 22 years.

Led by Jerome Powell, the central bank has essentially put the economy in reverse and jammed on the accelerator in a bid to speed away from inflation, stoked by $5 trillion in stimulus, more than two years of practically free credit, and a global trade system jammed up by the lingering effects of the pandemic. Inflation is...

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