On Wednesday, the Federal Reserve announced that it will raise the target range for the federal funds rate to between 5.25% and 5.5%, marking a quarter point increase and its fourth such move of 2023 and 11th since it began efforts to curb rising inflation last March.
As has been common with the Fed’s actions over the last year, the newest interest rate levels are beyond anything seen in recent history, with CNBC noting that this “would be the highest level for the benchmark rate since early 2001.” The Fed may not be done raising rates either, as Reuters reported that another rate increase could occur in September.
In June, the Fed opted to maintain the target range for the federal funds rate, noting that economic activity and job gains had expanded since it previously raised rates in early May.
When the Fed raised rates to the 5% to 5.25% range in May, it marked its 10th such action since March 2022. Prior to the May increase, the Fed had already increased rates twice this year while raising them seven times in 2022.
The rate increases began in March and May of 2022, with the Fed continuing its efforts to curb rising inflation in June 2022 by increasing the federal funds rate to a range between 1.5% and 1.75%, which, according to Yahoo Finance, was “the largest move [the Fed] ha[d] made in a single meeting since 1994.” The Fed then followed up with an increase of the same magnitude in July 2022, increasing the target range to 2.25% to 2.5%, followed by another three-quarter-point increase in late September 2022 and yet another in November 2022. The Fed then increased rates for a seventh time in December 2022, although by half a point instead of the three-quarter-point increases it issued in the other actions throughout 2022. The Fed then lifted rates by a quarter point in both February and March of this year.
