Fed raises interest rates by 0.5%

In an aggressive move, the Federal Reserve announced a half-percentage point rate hike to the benchmark interest rate. According to a report from the Associated Press, the increase in the Fed’s key short-term rate raised it to a range of 0.75% to 1% and aims to offset the worst inflation in 40 years. The Fed also announced that it will start reducing its $9 trillion balance of holdings made up mainly of Treasury and mortgage bonds to further raise borrowing costs throughout the economy. Federal Reserve Board Chair Jerome Powell said in a news conference that the economy is resilient enough to withstand higher borrowing rates, but the Dow Jones Industrial Average fell more than 1,000 points in early trading on May 5.