The Federal Reserve on Wednesday raised its key interest rate by a quarter of a percentage point.

Last month, the Fed took a break from raising rates after 10 consecutive rate hikes. The Fed has increased its benchmark interest rate from nearly zero to more than 5% in about a year and a half. At 5.3%t, the Fed’s benchmark short-term rate is at its highest level since 2001.

Why is the Fed raising rates again after taking a break? Federal Reserve Chairman Jerome Powell described the move as another step toward stabilizing prices. In June 2022, the United States’ annualized inflation rate perched above 9%. Last month, its annualized inflation rate slowed to 3%.

The Fed has repeatedly stated its goal is to reduce inflation to a rate of 2%t. Powell said Wednesday that the Federal Reserve experts no longer foresaw a recession.

This story originally appeared in WORLD. © 2023, reprinted with permission. All rights reserved.