Fed hikes rates by 75 basis points for first time since 1994

THE HILL — The Federal Reserve announced Wednesday it would hike interest rates this month at the fastest pace in nearly 30 years after a discouraging May surge in inflation.

The Federal Open Market Committee (FOMC), the panel of Fed officials responsible for setting interest rates, said it would raise the bank’s baseline interest rate range to 1.5 to 1.75 percent, an increase of 0.75 percentage points.

Officials also laid out an aggressive path of rate increases for the remainder of the year, with new economic projections released after the two-day meeting showing that policymakers expect interest rates to hit 3.4% by the end of 2022, which would be the highest level since 2008. By comparison, the March estimate showed that officials had penciled in rates hitting 2.5% by year’s end.