Federal Reserve hikes interest rates for the first time since 2018

The move marks the end of the Fed's pandemic-era easy money policy and comes amid soaring inflation across America.

The quarter-percentage-point increase had been well telegraphed by the central bank, with Chair Pro Tempore Jerome Powell hinting at it repeatedly over the past few months. Earlier this month, Powell told lawmakers that he favored a quarter-point raise.

This is the first rate increase since December 2018 and the first time rates have moved from their level of near zero since the bank slashed them almost exactly two years ago in March 2020 in the wake of the pandemic.

Prices have soared over the past year for the majority of Americans, pushing inflation well above the Fed's long-term target of 2% and forcing its hand. The central bank has a dual mandate to keep prices stable and employment at the maximum.

But during the pandemic, prices have risen on the back of high demand, supply chain chaos and higher energy costs. Initially, Powell referred to the pandemic inflation as "transitory" before retiring the use of the term during a Congressional hearing last November.

In the year ended in February, consumer prices rose 7.9%, while the prices US producers received for their goods soared 10% over the same period. Neither figure is adjusted for seasonal swings.

Meanwhile, the US labor market recovery has come along swiftly following the shock of the spring 2020 shutdown, which marked the largest job loss in history. As of February, the nation was still short 2.1 million jobs compared with the same month two years earlier.

Between the strong job market and high inflation only half of the Fed's mandate is fulfilled.

Powell will hold a press conference at 2.30 p.m. ET.

This is a developing story. It will be updated

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