Federal Reserve approves 0.5% hike, slowing rate increases

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Federal Interest Rates are still increasing, but at a slower rate (Photo: MGN)

(ABC NEWS) — The Federal Reserve said Wednesday it was raising its short-term borrowing rate another 0.5%, slowing an aggressive series of rate increases while continuing an effort to cool the economy and dial back inflation.

The increase in borrowing costs matched economist predictions.

The latest rate hike pulls the Fed back from three consecutive 0.75% increases, signaling confidence that the central bank can bring sky-high inflation down to normal levels.

The move arrives a day after a government report revealed that inflation stood at 7.1% last month compared with a year prior, continuing a monthslong decline from a 40-year record reached over the summer. However, inflation remains at a level more than triple the Fed’s target rate of 2%.

In a statement on Wednesday, the Fed said it expects that additional rate hikes will be necessary to further reduce inflation.

Categories: News, US