Federal Reserve hikes interest rates 0.25 percentage point

The latest increase in the federal funds rate — what banks charge each other for short-term loans — is smaller than the Fed's 0.5 percentage pointWith the latest increase, the Fed's target interest rate is set in a range between 4.50% and 4.75% — its highest level since late 2007.The Fed said its campaign to curb prices is working, while indicating it plans to keep rates high for some time.

Although Powell has underlined his commitment to curbing inflation, the battle may be entering a different phase aimed at bringing the economy in for a gentle landing. The Fed alluded to the"extent" of any future rate hikes, in contrast to wording in its December statement about the"pace" of tightening.

Inflation across the U.S. has fallen from a yearly rate of 9.1% this summer — its highest level in four decades — to a more modest "The labor market remains extremely tight with the unemployment rate at a 50-year low, job agency very high and wage growth elevated," he said, adding that"the labor market continues to be out of balance."

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