Your Evening Briefing: Fed Fires Opening Salvo With Big Rate Hike

The U.S. Federal Reserve delivered the biggest hike in interest rates since 2000 and announced it would start shrinking its massive balance sheet next month, deploying the most aggressive tightening of monetary policy in decades. The central bank raised its benchmark rate a half percentage point and will begin allowing its holdings of Treasuries and mortgage-backed securities to decline in June at an initial combined monthly pace of $47.5 billion, stepping up over three months to $95 billion. “Inflation is much too high and we understand the hardship it is causing and we are moving expeditiously to bring it back down,” Chair Jerome Powell said. Investors have been betting that an even bigger rate increase is in store for June. Treasury Secretary Janet Yellen predicted solid growth in the coming year and a possible “soft landing” for the economy as the Fed moves to bring down inflation.

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