The Fed raised interest rates by the most since 2000 and signaled it would maintain that pace at its next meetings. In an effort to curb soaring inflation, the Federal Reserve has unleashed its biggest tightening in decades. The Federal Open Market Committee (FOMC) voted unanimously on Wednesday to raise the benchmark interest rate by 0.5 percentage points. The Fed will allow its holdings of Treasuries and mortgage-backed securities not to be reinvested at maturity beginning in June, shrinking the balance sheet initially to $47.5 billion a month, rising to $95 billion in three months. Fed Chairman Jerome Powell said at a news conference, "Inflation is too high, we know the difficulty it creates, and we will move quickly to bring it down, and the committee generally believes that the next few meetings should continue at 50 basis points. Raise interest rates.” Powell’s remarks sparked gains in Treasuries and U.S. stocks, as he dispelled speculation that a 75 basis point rate hike could be possible in the coming months, saying it was “not something the committee is actively considering.” After raising interest rates by 25 basis points in March, the FOMC recently announced that it raised its target for the federal funds rate to 0.75%-1%.

U.S. Treasury Secretary Janet Yellen said she expects solid growth in the coming year and a possible "soft landing" as the Federal Reserve moves to lower inflation. "I believe we're going to see solid growth over the next year, and the Fed needs to be smart and lucky, but I believe they can do it," Yellen said in an interview at a Wall Street Journal event on Wednesday. Several economists are predicting a recession in 2023 as the Fed raises interest rates. But Yellen said "a soft landing is possible." The Treasury secretary said that while consumer prices have soared, medium-term expectations for inflation haven't been affected as much, meaning inflation is now on par with former Federal Reserve Chairman Paul P. Volcker faces a different inflation. Volcker tightened monetary policy so aggressively in the early 1980s that it triggered a severe recession.

Growth at U.S. service providers slowed in April and cost pressures worsened, underscoring that multi-decade-high inflation and struggles to recruit and retain workers are weighing on the industry. Data released on Wednesday showed the Institute for Supply Management (ISM) services index fell to 57.1 from 58.3 in March. A reading above 50 indicates expansion. The median forecast of economists polled by Bloomberg was 58.5. A gauge of prices paid by businesses for materials and services jumped to a record 84.6 in April, signaling continued upward pressure on U.S. inflation. Service providers, which typically have relatively low profit margins, may pass on sharply higher costs to their customers. "Business activity remains strong; however, high inflation and capacity constraints are holding back," Anthony Nieves, chairman of the ISM's Services Sector Survey Committee, said in a statement.

The EU plans to ban Russian crude oil for the next six months and its refined products by the end of the year under the EU's sixth round of sanctions against Russia, increasing pressure on Putin over Russia's invasion of Ukraine. "This will be a blanket import ban on Russian crude oil, including seaborne and pipeline transport, crude oil and refined oil," European Commission President von der Leyen told the European Parliament. "We will ensure an orderly phase-out of Russian oil, allowing us and our partners to secure alternative supplies and minimizing the impact on global markets." Hungary and Slovakia, which are highly dependent on Russian energy, had earlier opposed abrupt supply cuts, according to The two countries will enjoy a relatively long time frame to impose sanctions until the end of 2023, according to people familiar with the matter.

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