Fed raises interest rates by 0.5 points

Wednesday’s hike was the Federal Reserve’s seventh this year. Four of them were 0.75 percentage point increases. This increase puts the Fed’s interest rates between 4.25 percent and 4.5 percent—a 15-year high. Fed officials forecast that interest rates could climb to between 5 percent and 5.25 percent by the end of 2023. A government report this week showed U.S. inflation trending downward for the fifth month in a row. Inflation came down from 9.1 percent in June to 7.1 percent in November as compared with a year before.

If inflation is going down, why are interest rates still going up? Federal Reserve Chairman Jerome Powell said Wednesday that while the news of inflation’s descent is welcome, the Fed is demanding “substantially more evidence” to show that the trend will continue before easing up on interest rate hikes.

Dig deeper: Read Jerry Bowyer’s column in World Opinions about how the Fed is playing a large role in creating the market volatility it’s trying to fix.