US Federal Reserve raises interest rates again

The head of the US Federal Reserve announced an interest rate hike in June that he described as "unusually large." At the time, Jerome Powell said he did not expect hikes of three-quarters of a percentage point to be common. Now, he has introduced one for a third time.

With Wednesday's action, the Fed has raised interest rates by three percentage points this year. Powell said that, as the stance of monetary policy tightens further, it will become appropriate to slow the pace of increases.

But he insists, for now, that the Fed will do whatever it needs to tame inflation not seen in decades. The inflation rate reached 9.1 percent in June; it has since fallen to 8.3. Policymakers target a rate of 2 percent.

The Fed has been unable to drive down the prices of essentials like food, rent and electricity. Powell pointed to factors not seen in prior cycles, like the fighting in Ukraine and supply shocks brought about by the pandemic.

Higher rates make buying a house, a car or a business more expensive, which lowers demand and prices. Powell said Fed officials anticipate similar rate increases will be "appropriate" but that they will make their decisions "meeting by meeting."