News Public Policy News Expect at Least Two More Big Interest Rate Hikes The Fed may follow its biggest rate increase since 2000 with two more like it By Diccon Hyatt Updated on May 27, 2022 Fact checked by Julianne Slovak Photo: Drew Angerer - Staff / Getty Images If you thought the Fed’s recent actions to bring inflation under control have been drastic, hang on tight: Two more big hikes to its benchmark interest rate are likely this summer, according to newly released details about the central bank’s last meeting. Federal Reserve officials plan to raise the fed funds rate by 0.50 percentage point at each of their next two meetings, the same increase they announced May 4, according to meeting minutes released Wednesday. This month’s rate hike was the biggest since 2000 and brings the target range to 0.75%-1%, up from 0.25%-0.50%. The minutes confirmed what most people were already expecting regarding the next meetings, economists said, but they also showed that officials may reassess their approach later in the year and back off a bit to prevent an economic recession. The fact that two more hefty hikes are planned shows how serious inflation has become—it’s currently running near its highest level in more than 40 years—and how determined the Fed is to get it under control. The fed funds rate influences interest rates on all kinds of loans, and the rate hikes are intended to discourage borrowing and spending, thus reducing inflation by rebalancing supply and demand. This approach, however, comes with the danger of causing a recession if it slows the economy down too much. How well the Fed will be able to walk that tightrope, and what it will do after the summer is over, remains to be seen. Note The fed funds rate heavily influences interest rates throughout the economy, including those on credit cards and car loans, but it’s not the rate you get on those loans. Banks typically charge a set amount above their so-called prime rate. The prime rate moves in tandem with the fed funds rate, but it’s typically about 3 percentage points higher. “The Fed will likely keep its cards closer to its chest, waiting to see how the outlook and risks unfold,” Michael Gregory, deputy chief economist at BMO said in a commentary. “That is, unless further worrisome inflation developments force the Fed to lay its cards on the table.” Have a question, comment, or story to share? You can reach Diccon at dhyatt@thebalance.com. Want to read more content like this? Sign up for The Balance’s newsletter for daily insights, analysis, and financial tips, all delivered straight to your inbox every morning! Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. Federal Reserve. "Minutes of the Federal Open Market Committee May 3–4, 2022." Federal Reserve. “Open Market Operations Archive.” Federal Reserve. “Open Market Operations.” The conversation.com. “How raising interest rates curbs inflation – and what could possibly go wrong.”