U.S. Mortgage Rates
The Federal Reserve approved its largest interest rate hike in more than a quarter-century on Wednesday to stem a surge in inflation that U.S. central bank officials acknowledged may be eroding public trust in their power and is being driven by events that appear to be increasingly beyond their control. The Fed’s hawkish commitment to controlling inflation has already triggered a broad tightening of credit conditions, which is being felt in the US housing and stock markets, and is likely to slow demand throughout the economy – as the Fed intends.?
The move raised the target federal funds rate by three-quarters of a percentage point to a range of 1.5 percent to 1.75 percent, which is still low by historical standards.
Officials also anticipate steady rate increases through the rest of the year, possibly including additional 75-basis-point increases, with a federal funds rate of 3.4 percent at the end of the year. That would be the highest level since January 2008, and enough, according to Fed projections, to significantly slow the economy in the coming months and lead to an increase in unemployment.?
Nonetheless, the Fed chairman’s remarks were among his most sobering yet about the challenge he and his colleagues face in lowering inflation from its current 40-year high to a level closer to its 2 percent target without causing a sharp slowdown in economic growth or a sharp increase in unemployment.