U.S. Federal Reserve Hikes Rate To Highest In 22 Years

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The U.S. Federal Reserve has increased its benchmark interest rate by a quarter point to 5.5%, the highest since 2001 as it aims to combat high inflation. While some experts expect the rate to climb even higher to 5.6% by the end of the year, Chairman Jerome Powell said, “We will continue to make our decisions meeting-by-meeting based on the totality of the incoming data and their implications for the outlook for economic activity and inflation, as well as the balance of risks.” The Fed has raised interest rates 11 times now over the last 16 months, a pace not seen since the 1980’s.  Powell was optimistic that the economy could now avoid recession, but Jim Grant, founder and editor of Grant’s Interest Rate Observer, warns of “unintended but adverse consequences” of the Fed’s “really long, and I think ill-advised, experiment in rate suppression.” Grant said, “interest rates…have been distorted beyond recognition. Ergo, there will be unintended but adverse consequences.”