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• For the first time since 2018, The Federal Reserve’s policy-setting committee raised interest rates as they
pivot away from recovery-focused accommodations towards a more aggressive fight against persistent
domestic inflation.
• The Federal Funds rate was raised by 25 basis points, moving from the 0-0.25% range that it has been
at since March 2020 to a target range of 0.25%-0.50%. Leveraging results tabulated from the recent
Summary of Economic Projections released on March 16th, FOMC members, on average, project six
more rate hikes in 2022 in an effort to curb inflationary pressures not seen in more than 40 years.
• Throughout the pandemic-recovery, The Fed consistently signaled its commitment to an accommodative
policy regime as the US economy dealt with the macroeconomic scars of COVID-19 case surges and
related restrictions on activity. As GDP recovered and labor market distress continued to subside in
2021, policymakers began pivoting their focus to tempering high inflation as stronger consumer demand
bucked up against supply constraints.
• The challenge for the Fed now will be to moderately slow the economy enough to relieve inflationary
pressures without kicking the US economy into recession. The FOMC’s decision to raise rates despite
increased economic and geopolitical uncertainty stemming from the War in Ukraine may be a signal that
they are willing to accept a degree of economic pain in order to reduce inflation.

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