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US Fed hikes rates, the biggest increase since 1994

The Fed envisions steady rate increases through the rest of this year

US Fed hikes rates, the biggest increase since 1994
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The US Federal Reserve on Wednesday approved an interest rate hike of three-quarters of a basis point—the biggest increase since 1994 to stem a surge in inflation already at a 40-year high.

The Fed envisions steady rate increases through the rest of this year, perhaps including additional 75-basis-point hikes, with a federal funds rate at 3.4 per cent at year's end, news agency Reuters reported.

That would be the highest level since January 2008 and enough, Fed projections show, to slow the economy markedly in coming months and lead to a rise in unemployment although the Fed did assure that its intention was not to induce a recession.

Expectations of the big Fed rate hike was at the peak after government data Friday showed consumer inflation accelerated in May instead of easing as hoped.

The Fed is scrambling to get prices under control after being criticized earlier for reacting to slowly to inflation pressures.

Britain's central bank also has raised rates, and the European Central Bank says it will do so next month. Japan's central bank has kept rates near record lows.

That has caused the yen to fall to two-decade lows around 135 to the dollar as traders shift capital in search of higher returns.

Markets also have been jolted by Russia's attack on Ukraine, which has pushed oil prices to history-making highs above $120 per barrel, and by virus outbreaks in China that led to the closure of factories and disrupted supply chains.

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