Reference to the CFA’s Advocacy Update from July 28, 2022

The U.S. central bank did what it was expected to do on Wednesday, raising its benchmark lending rate by three quarters of a percentage point as it steps up its battle to rein in runaway inflation.

The Federal Reserve raised the upper bound of its benchmark rate — known as the federal funds rate — to 2.5 per cent.

That matches the Bank of Canada’s rate, after Canada’s central bank raised by a full percentage point earlier this month.

After slashing interest rates in the early days of the pandemic, central banks around the world have recently begun to aggressively raise lending rates to deal with inflation that has risen to its highest point in decades.

The official U.S. inflation rate topped nine per cent last month, while it’s currently more than eight per cent in Canada.

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