US Federal Reserve announces three-quarter-point interest rate increase to cool inflation – as it happened

That’s a wrap on the US politics blog for today, thanks for your company. Please join us again tomorrow.

Here’s what we followed:

• The Federal Reserve announced a 0.75% rise in interest rates, the fourth this year, pushing up the cost of mortgages, credit cards and car loans. Fed chair Jerome Powell said at a press conference the rise was “essential” to curb runaway inflation.
• The US has offered Russia a deal aimed at bringing home jailed Americans Brittney Griner, a professional basketball player, and security expert Paul Whelan. Secretary of State Antony Blinken said he expected to speak with his counterpart in Moscow shortly, for the first time since before Russia invaded Ukraine on 24 February.
• A bill pledging support for human trafficking victims passed the House, with 20 Republicans voting against. They included Florida congressman Matt Gaetz, who is the subject of a justice department investigation involving sex with a 17-year-old girl.
• Gun manufacturers pocketed more than $1bn over a decade from the sales of AR-15 military-style weapons, as hundreds of Americans died in mass shootings. Carolyn Maloney, Democratic chair of the House oversight committee, told a hearing the gun industry was “profiting off the blood of innocent Americans.”
• Joe Biden tested negative for Covid-19 and returned to work in-person after a five-isolation to give an address in the White House Rose Garden. The president warned that the pandemic was resurgent and urged Americans to get vaccinated and boosted.
• House Democrats introduced a bill to establish term limits for supreme court justices, after an unprecedented term in which federal abortion rights were overturned and threats emerged from the right-wing panel to same-sex marriages and contraception.
• The justice department has centered its criminal inquiry over the January 6 insurrection to Donald Trump’s personal conduct as he fought to stay in office after his 2020 defeat by Joe Biden, per the Washington Post.

A press conference explaining this afternoon’s 0.75% rise in interest rates has just wrapped up, after an hour, with Federal Reserve chair Jerome Powell’s final words attempting to offer comfort to Americans paying the price of soaring inflation:

.css-knbk2a{height:1em;width:1.5em;margin-right:3px;vertical-align:baseline;fill:#C70000;}We know that inflation is too high. We understand how painful it is, particularly for people who are living paycheck to paycheck, and spend most of that paycheck on necessities such as food and gas, and heating their homes and clothing and things like that.

We do understand that that those people suffer the most. The middle class and better off people have some resources where they can absorb these things, but many people don’t have those resources.

So you know, it is our job, it is our institutional role. We are assigned uniquely and unconditionally the obligation of providing price stability to the American people. And we’re going to use our tools to do that.

The US has offered Russia a deal aimed at bringing home jailed Americans Brittney Griner, a professional basketball player, and security expert Paul Whelan, the Associated Press reports.

Secretary of State Antony Blinken said Wednesday he expected to speak with his counterpart in Moscow shortly, for the first time since before Russia invaded Ukraine on 24 February.

His statement marked the first time the US government has publicly revealed any concrete action to secure the release of Griner, who was arrested on drug-related charges at a Moscow airport in February and testified Wednesday at her trial.

Blinken did not offer details on the proposed deal, which the AP says was offered weeks ago.

The elephant in the room, until a reporter asked about it during the question and answer session following Jerome Powell’s statement, was whether there was going to be a recession in the US, as some analysts have predicted but others, including Joe Biden, have attempted to discount.

The Federal Reserve chair said he did not think a recession was inevitable:

.css-knbk2a{height:1em;width:1.5em;margin-right:3px;vertical-align:baseline;fill:#C70000;}Price stability is really the bedrock of the economy and nothing works in the economy without price stability. We can’t have a strong labor market without price stability for an extended period of time.

We need a period of growth below potential in order to create some slack so that supply can catch up. We also think that there will be, in all likelihood, some softening in labor market conditions. Those are things we expect and are probably necessary if we are able to get inflation back down to 2%.

We’re trying to do just the right amount. We’re not trying to have a recession, and we don’t think we have to.

I do not think the US is currently in a recession. The reason is there are too many areas in the economy that are performing too well, the labor market in particular.

Federal Reserve chair Jerome Powell says he’s sympathetic to American families struggling with soaring prices at supermarket checkouts, gas stations and elsewhere:

.css-knbk2a{height:1em;width:1.5em;margin-right:3px;vertical-align:baseline;fill:#C70000;}Although prices for some commodities have turned down recently, the earlier surge in prices of crude oil and other commodities that resulted from Russia’s war on Ukraine has boosted prices for gasoline and food creating additional upward pressure on inflation.

My colleagues and I are acutely aware that high inflation imposes significant hardship, especially on those least able to meet the higher costs of essentials like food, housing and transportation.

Powell pointed to a “robust” jobs market, with unemployment near a 50-year low, strong consumer demand and recent reductions in gas prices.

But he said the Fed needed to maintain a tight rein on the economy in order to reduce inflation, and hinted that more rate rises – beyond the four already announced this year – will be likely in the coming months and into next year.

He did, however, suggest the aggressive pace of the interest rate rises will decrease:

.css-knbk2a{height:1em;width:1.5em;margin-right:3px;vertical-align:baseline;fill:#C70000;}It likely will become appropriate to slow the pace of increase. While we assess how our cumulative policy adjustments are affecting the economy and inflation.

Jerome Powell, chair of the Federal Reserve, has spoken about the 0.75% rise in interest rates announced this afternoon. He said the move was essential because “inflation is much too high.”

Powell said:

.css-knbk2a{height:1em;width:1.5em;margin-right:3px;vertical-align:baseline;fill:#C70000;}My colleagues and I are strongly committed to bringing inflation back down. And we’re moving expeditiously to do so.

We have both the tools we need and the resolve it will take to restore price stability on behalf of American families and businesses.

As my colleague Dominic Rushe explains here, the US central bank is aggressively raising rates at levels unseen since the mid-1990s as it struggles to tamp down soaring prices, which rose by an annual rate of 9.1% in June, the fastest inflation rate since 1981.

When mortgage rates, car loans and credit cards are more expensive, the theory goes, people are less inclined to spend, and inflation comes down.

Powell added:

.css-knbk2a{height:1em;width:1.5em;margin-right:3px;vertical-align:baseline;fill:#C70000;}The economy and the country have been through a lot over the past two and a half years and have proved resilient.

It is essential that we bring inflation down to our 2% goal, if we are to have a sustained period of strong labor market conditions that benefit all.

The Federal Reserve’s just-announced decision to increase interest rates by three-quarters of one percent, the fourth rise this year, was not entirely unexpected, as my colleague Dominic Rushe explains:

With the US economy teetering on the edge of a recession and inflation running at a four-decade high, the Federal Reserve announced another three-quarter of a percentage point increase in its benchmark interest rates on Wednesday, the second such increase in just over a month.

The US central bank is aggressively raising rates at levels unseen since the mid-1990s as it struggles to tamp down soaring prices, which rose by an annual rate of 9.1% in June, the fastest inflation rate since 1981.

The hike, the Fed’s fourth this year and the third consecutive one to be larger than usual, comes as central banks worldwide seek to calm price rises with higher rates.

So far the rate rises appear to have done little to rein in rising prices and the costs of everything from food and rent to gas remain high. The Fed will not meet again until September, at which point more economic data will be available, and its decision committee should be better able to see if its policy is working.

One important measure of the economy will be made public on Thursday, when the commerce department releases its latest survey of gross domestic product (GDP) – a broad measure of the cost of a wide range of goods and services across the US economy. Many economists are expecting growth to have slowed for the second quarter in a row – a guide used by many to declare a recession.

Recessions are, however, officially declared by the National Bureau of Economic Research (NBER), a research group that uses a broad range of measures including jobs growth to decide when the US economy is shrinking. The NBER often makes its announcement well after a recession has begun, as it assesses other economic factors.

Jobs growth remains strong – the US added 372,000 jobs in June and the unemployment rate stayed low at 3.6%.

But, for many, two months of declining GDP is a strong indicator that the economy is in a recession. Michael Strain, director of economic policy studies and senior fellow at the right-leaning American Enterprise Institute, pointed out this week that all of the last 10 recessions in the US have been preceded by two consecutive quarters of negative economic growth.

Read the full report:

As expected, the US Federal Reserve has increased interest rates by 0.75% in an attempt to cool raging inflation.

We’ll have more details soon…

A bill pledging support for human trafficking victims has passed the House, with 20 Republicans voting against.

They include Florida congressman Matt Gaetz, who is the subject of a justice department investigation involving sex with a 17-year-old girl who once traveled with him, and several other close allies of former president Donald Trump.

Here’s where we are on a busy Wednesday, as we await the announcement from the Federal Reserve of a US interest rate hike:

• Gun manufacturers pocketed more than $1bn over a decade from the sales of AR-15 military-style weapons, as hundreds of Americans died in mass shootings. Carolyn Maloney, Democratic chair of the House oversight committee, said the gun industry was “profiting off the blood of innocent Americans.”
• Joe Biden tested negative for Covid-19 and returned to work in-person after a five-isolation to give an address in the White House Rose Garden. The president warned that the pandemic was resurgent and urged Americans to get vaccinated and boosted.
• House Democrats introduced a bill to establish term limits for supreme court justices, after an unprecedented term in which federal abortion rights were overturned and threats emerged from the right-wing panel to same-sex marriages and contraception.
• The justice department has centered its criminal inquiry over the January 6 insurrection to Donald Trump’s personal conduct as he fought to stay in office after his 2020 defeat by Joe Biden, per the Washington Post.

House Democrats have introduced a bill to establish term limits for supreme court justices, after an unprecedented term in which the highest court produced a series of deeply conservative rulings upending American law.

In June, a court dominated 6-3 by Republican appointees overturned the right to abortion. It also issued consequential rulings on gun control, the environment and other controversial issues.

The Supreme Court Tenure Establishment and Retirement Modernization Act (Term), would establish 18-year terms for supreme court justices and establish a process for the president to appoint a new justice every two years. After an 18-year term, justices would be retired from active judicial service.

If the bill were to take effect, the nine justices now on the court would essentially be forced into senior status in order of reverse seniority, as jurists were appointed under the new mechanism.

Supreme court justices are currently appointed for life. The US stands alone as the only advanced democracy that does not have either a fixed term or a mandatory retirement age for judges on its highest court.

“Regularizing appointments every two years will ensure a supreme court that is more representative of the nation, reflecting the choices of recently elected presidents and senators,” Hank Johnson, a Georgia Democrat who introduced the bill, said in a statement.

“Term limits for supreme court justices are an essential tool to restoring a constitutional balance to the three branches of the federal government.”

The bill is unlikely to pass. Republicans have vigorously shot down any attempts to change the makeup of the supreme court. Even if the measure passed the Democratic-controlled House, it would probably die in the Senate, where it would need the vote of 10 Republicans in addition to all Democrats to overcome the filibuster.

Some Democrats in Washington are publicly fuming over the party’s decision to boost a Republican congressional candidate in Michigan who has questioned the 2020 election result.

The outcry escalated after Axios reported that Democrats plan to spend $425,000 to air an ad ahead of Michigan’s primary, highlighting the conservative bona fides of John Gibbs, who is challenging the incumbent Republican, Peter Meijer.

In his first term in Congress, Meijer was one of 10 House Republicans to support impeaching Donald Trump after the January 6 attack.

The 30-second ad is styled as an attack ad against Gibbs but has dog-whistle themes designed to appeal to GOP voters.

Jamie Raskin, a Maryland Democrat on the January 6 committee, said there was nuance in considering whether to boost election deniers.

While he said he understood the argument that it was “categorically wrong” to boost election deniers, he also made a case for why it was appropriate to intervene.

“In the real world of politics, one can also see an argument that if the pro-insurrectionist, election-denier wing of the Republican caucus is already dominant, then it might be worth it to take a small risk that another one of those people would be elected, in return for dramatically increasing the chances that Democrats will be able to hold the House against a pro-insurrectionist, election-denying GOP majority,” he told Axios.