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The Federal Reserve announced an increase in the benchmark interest rate by three quarters of a point yesterday, according to the Associated Press.

The rate: The Fed’s decision will shift the key rate to a range between 2.25% and 2.5%. The rate is now at its highest mark since 2018.

The context: “The central bank’s decision follows a jump in inflation to 9.1%, the fastest annual rate in 41 years, and reflects its strenuous efforts to slow price gains across the economy. By raising borrowing rates, the Fed makes it costlier to take out a mortgage or an auto or business loan. Consumers and businesses then presumably borrow and spend less, cooling the economy and slowing inflation.”

In other economic news: New orders for durable goods increased in June, according to the U.S. Census Bureau.

• They increased “1.9% from $267.6 billion in May to a record $272.6 billion in June,” said NAM Chief Economist Chad Moutray.
• “There was a very large increase in defense aircraft and parts orders, which can often be highly volatile from month to month. Excluding transportation equipment, new durable goods orders were up 0.3% from $179.3 billion to $179.9 billion, also an all-time high.”

The big picture: “On a year-over-year basis, new durable goods orders have jumped 10.9% since June 2021, or 7.2% with transportation equipment excluded,” said Moutray.

The outlook: “As such, these data continue to reflect some resilience in the manufacturing sector despite economic and geopolitical uncertainties and ongoing challenges with supply chain bottlenecks, global uncertainties, workforce shortages and soaring costs,” said Moutray.