The American central bank is reacting to the constantly rising inflation with a double monetary policy strike.

As expected, the Federal Reserve is raising interest rates by half a percentage point, bringing them into the range between 0.75 and 1 percent.

At the same time, the Fed is moving away from quantitative easing and in June will begin to shrink its bond portfolio, which has swelled to nearly $9 trillion.

Central bankers also expect that further rate hikes will be necessary to contain inflation.

Winand von Petersdorff-Campen

Economic correspondent in Washington.

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The price index for private consumer spending, which the Fed prefers as an indicator of inflation, was 6.6 percent above the previous year's value in March and had recently risen at an increasing pace.

"Inflation is way too high and we understand the hardships it's causing," Fed Chair Jerome Powell said at the press conference following the Fed meeting.

"We're moving briskly to bring them back down."

Price increases as a heavy burden with strong inertia

The rhetoric of the head of the Fed shows a new determination on the part of the central bank to curb inflation: there is broad agreement in the Open Market Committee, which is responsible for monetary policy, that interest rate hikes of half a percentage point will also be up for debate in the next few meetings, but not 0.75 percentage points.

Analysts had previously assumed two 0.5 percentage point steps and then smaller steps.

Powell doesn't seem to think determined tightening is risky enough to stifle the rebound.

The US economy is very strong and well positioned to endure tighter monetary policy.

"We have a good shot at a soft or softer landing," Powell said.

A strong labor market with an unemployment rate of just 3,

The double whammy in monetary policy represents the largest tightening in over 20 years.

In recent years, the US Federal Reserve has limited itself to smaller rate hikes of 0.25 percentage points.

The unanimous decision also documents that the Federal Reserve sees inflation as a heavy burden with strong inertia.

The wording that inflation is temporary has long since disappeared from official statements.

Now the official statement reads: "Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, with higher energy prices and broader price pressures in general."

The central bankers emphasize that economic forecasts are exceptionally difficult because the effects of the Ukraine war and any long-term effects of possible pandemic lockdowns in China are difficult to calculate.

However, they fear that both international crises will tend to increase price pressure.

The official statement also states that the Fed is paying close attention to potential inflationary risks and is ready to adjust monetary policy as soon as new risks emerge that threaten the achievement of the Fed's objectives: medium-term price stability with an inflation rate of 2 percent with maximum employment.

However, central bankers also admit that they cannot do anything to counter price increases triggered by international crises.