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With the number of COVID-19 cases falling and consumer spending on the rise, the Federal Reserve on Wednesday increased the interest rate on short-term loans for the first time in more than three years.
In addition to raising the interest rate by a quarter of a percentage point, the Fed has forecast at least six more increases this year... and four more by the end of 2023! The hikes have been put into place to combat inflation resulting from the Russia-Ukraine war, Fed officials say.
"The invasion of Ukraine by Russia is causing tremendous human and economic hardship," reads a statement released Wednesday. "The implications for the U.S. economy are highly uncertain, but in the near term the invasion and related events are likely to create additional upward pressure on inflation and weigh on economic activity."
Despite the increasing rates, Fed Chairman Jerome Powell says he believes the U.S. economy will be unscathed by the multiple interest rate increases.
"It's clearly time to raise interest rates," Powell says. "We do feel the economy is very strong and well positioned to withstand it."