The Federal Reserve announced Wednesday, July 26, it had raised its key interest rate by 0.25% to as much as 5.5%, the highest level in 22 years, as it continues to fight persistent inflation in the U.S. economy.
Though consumer prices have declined for 12 straight months, in June, consumer prices increased 3% year on year.
Even though that's the lowest the annual inflation rate has been in more than two years, it's still too high for the Fed, which is looking to wrestle increases down to about 2%.
By raising its interest rates, the Fed hopes to make borrowing and investing more expensive, thereby reducing overall demand for goods, services and labor in the economy. Read more.