Fed Hikes Rates 75 Basis Points, Intensifying Inflation Fight

Having just won Senate confirmation to a second four-year term, Powell must also re-establish the Fed’s inflation-fighting credibility with investors and with Americans who are furious over the soaring cost of living.

Inflation Gauge

The Fed aims for 2% inflation measured by the Commerce Department’s personal consumption expenditures price index, which rose 6.3% in the 12 months through April, near a 40-year high.

Policymakers now forecast the gauge to advance 5.2% this year, up from 4.3% in the March projections, based on the median estimate of Fed governors and regional presidents.

They forecast gross domestic product growth to slow to 1.7% this year compared with a 2.8% expansion projection in March. Unemployment could rise to 4.1% at the end of 2024 from 3.6%.

The FOMC vote, which included newly sworn-in governors Lisa Cook and Philip Jefferson, included a dissent from Kansas City Fed President Esther George, who preferred a half-point increase.

Powell holds a press conference at 2:30 p.m. and will testify before Congress over two days next week, where he can expect to be challenged over his central bank’s performance.

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