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Federal Reserve hikes key interest rate 0.75 percentage point as it clamps down on inflation

The Federal Reserve on Wednesday raised its benchmark interest rate by 0.75 percentage point, the fifth time this year the U.S. central bank has hiked rates as it tries to douse red-hot inflation

The Fed’s target interest rate is now in the range of 3% to 3.25%, the highest level in 14 years. The bank’s rate-setting body noted that inflation remains “elevated” and said it was “highly attentive to inflation risks.”

Inflation has emerged as the most pressing economic issue this year, with prices of everything from housing to groceries outpacing wage increases and squeezing consumers.

Fed Chair Jerome Powell is scheduled to hold a news conference at 2:30 p.m. Eastern time. His remarks will be parsed for hints of whether the Fed expects to moderate the pace of rate hikes in the coming months or continue tightening credit significantly until it’s convinced that inflation is abating. 

In August, Powell warned that the Fed’s monetary tightening would “bring some pain” for Americans. Wall Street has interpreted that to mean the central bank will keep hiking rates even if it hurts economic growth, including triggering a recession. 

This is a developing story. The Associated Press contributed reporting.

Source: CBS Minnesota

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