THE U.S. Federal Reserve on Wednesday raised its benchmark interest rate by 75 basis points, the second in a row of that magnitude, as elevated inflation showed no clear sign of easing.

“Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures,” the Fed said in a statement after a two-day policy meeting, adding that the central bank is “highly attentive to inflation risks.”

“The war [in Ukraine] and related events are creating additional upward pressure on inflation and are weighing on global economic activity,” the Fed said.

The Federal Open Market Committee (FOMC), the Fed’s policy-making body, decided to raise the target range for the federal funds rate to 2.25 to 2.5% and “anticipates that ongoing increases in the target range will be appropriate.”

The statement showed that all 12 committee members voted for the decision.

The committee noted that it will also continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities.

The latest move came after the Fed raised its benchmark interest rate by 75 basis points at its June meeting, marking the sharpest rate hike since 1994. The Fed previously raised rates by 25 basis points in March and then by 50 basis points in May.

Headline consumer price index (CPI) has remained over 8% since March this year, a stark reminder that the Fed has a long way to go to bring elevated inflation under control. CPI in June surged 9.1% from a year ago, hitting a fresh four-decade high.

The Fed chair dismissed the view that U.S. economy is already in a recession, citing labor market strength.

The U.S. economy is estimated to have shrunk at an annual rate of 1.2% in the second quarter, according to the Federal Reserve Bank of Atlanta’s GDPNow model updated Wednesday.

With a first-quarter decline of 1.6%, a second consecutive quarter of negative growth would meet the technical definition of a recession. (Xinhua)