Federal Reserve raises key interest rate by half-point, slowing its fight against inflation

The year-over-year increase of 7.1%, though still high, was sharply below a recent peak of 9.1% in June.

In recent weeks, Fed officials have indicated that they see some evidence of progress in their drive to defeat the worst inflation bout in four decades and to bring inflation back down to their 2% annual target. The national average for a gallon of regular gas, for example, has tumbled from $5 in June to $3.21.

And one measure the Fed tracks closely — “core” prices, which exclude volatile food and energy costs for a clearer snapshot of underlying inflation — rose only slightly for a second straight month. At the Fed, Powell has made clear that the central bank isn’t close to declaring victory over high inflation. Fed officials will likely want to see further moderate inflation readings before they would be comfortable suspending their rate hikes.

The officials have said they want rates to reach “restrictive” levels that slow growth and hiring and bring inflation down to their target range. Worries have grown that the Fed is raising rates so much in its drive to curb inflation that it will trigger a recession next year.

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