Why does the Fed raise interest rates? And how do those hikes slow inflation?
The Federal Reserve is keeping up its efforts to control prices by raising interest rates while Americans confront 40-year high inflation.
The Federal Reserve increased interest rates by 0.75 percentage points in June, the largest increase since 1994, to a range of 1.5 percent to 1.75 percent, according to USA TODAY.
More hikes are likely, with the next one expected on Wednesday.
At the conclusion of its two-day Federal Open Market Committee meeting on Wednesday at 2:00 PM ET, the Fed is anticipated to announce another increase.
The FOMC is the body within the Fed that decides monetary policy, including interest rates.
Further hikes are expected at committee meetings scheduled in September, November, and December.
In a news conference in June, Fed Chair Jerome Powell predicted that a 0.50 point or 0.75 point hike in July is "very likely." A full percentage point change is conceivable but implausible, according to some economists.
According to economists surveyed by Bloomberg, the rate will climb by 0.75 percentage points in July and then continue to rise, reaching a range of 3.25 percent to 3.5 percent by the end of 2022.
Interest rate hikes create volatility in the stock market.
Higher interest rates are meant to slow the economy, which can stunt revenues for companies, potentially damaging their growth and stock prices, according to Forbes.