US Fed hikes rate by a half-percentage point

The US Federal Reserve hiked interest rate by a rare half-percentage-point last night. This is the sharpest increase in interest rate since 2000. The US Central Bank announced plans to shrink its 9 trillion Dollar asset portfolio starting next month in an effort to reduce inflation that is running at a four-decade high.

The moves, announced after a two-day policy meeting, will raise the central bank’s benchmark federal-funds rate to a target range between 0.75 percent and 1



percent.

Together, the steps mark the most aggressive Government tightening of monetary policy at one meeting in decades, aimed at rapidly reducing the economic stimulus that has contributed to rising price pressures.

Major US stocks rallied across the board last night after Federal Reserve Chairman Jerome Powell in the press conference ruled out larger rate hikes and emphasized the possibility of a soft landing, tamping down inflation without inducing a recession.