Durrant Pate/Contributor

The United States Federal Reserve today hiked its benchmark interest rate again by a quarter of one percentage point, bringing it to its highest rate in 22 years.

The vote to raise the benchmark rate was unanimous, as the Fed, America’s Central Bank, also signals that it is prepared to do more to tame rising inflation. The decision boosts the Fed’s benchmark interest rate to a range of 5.25 per cent -5.5 per cent.

In a statement, the Fed said that it remained “highly attentive” to inflation risks, noting that it’s Monetary Policy Committee will continue to assess additional information and its implications for monetary policy.

Fed’s Monetary Policy Statement

According to the statement, the Fed would look at the data, the cumulative monetary tightening to date and the lags with which interest-rate policy affects the economy “in determining the extent of additional policy firming that may be appropriate” to return inflation to the 2.0 per cent target.

In June, Fed officials penciled in one more 25-basis point hike in addition to today’s move. The Fed has raised interest rates aggressively over the past 16 months to try to get the cost of money high enough to to cool inflation.

However, the Fed contends that it isn’t sure it has got rates high enough, what they say is “restrictive” to growth. The economy has been resilient, alleviating fears of a recession, at least this year.

The statement said economic activity was expanding “at a moderate pace,” a slight upgrade from the “modest pace” seen at the last meeting in June. In the wake of the signs of progress in the June consumer inflation data released earlier this month, many Wall Street economists think today’s rate hike will be the final rate hike of the cycle.

They expressed the view that the economic data over the next six weeks, until the Fed meets again in late September, will convince the central bankers that inflation is coming down and that they can hold rates steady. There will be four major indicators —July and August reports for employment and consumer inflation — before the next Fed meeting in September.

Former top Obama economist, Jason Furman, told MarketWatch that he thinks the terminal rate could be around 6.0 per cent.