U.S. rates hike 0.75 percentage points for fourth time to fight inflation | Business News

The Fed has raised interest rates sharply for the fourth time in a row.

The Fed, the central bank known as the U.S. central bank, hikes rates again rate 0.75 percentage points to curb soaring inflation.

This widely expected rise That would mean more expensive borrowing for mortgage holders and those paying credit card debt.

U.S. interest rates are now at 3.75% to 4%, from 3% to 3.25% last increase in September.

The latest hawkish stance is to limit rising inflation, which more than 8.2% US in the 12 months to September. Rate hikes are part of an overall plan to bring inflation down to 2 percent.

There will be no slack in pursuing that goal, as the committee that decides U.S. interest rates said it expects a “sustained increase” in rates to be appropriate for “some time.”

The Fed has taken responsibility for inflation, and Fed Chairman Jay Powell said in a statement that price stability is the responsibility of his organization and the cornerstone of the economy. “Without price stability, the economy doesn’t work for anyone,” he said.

It remains to be seen how high these rates are. Mr Powell added that there was “a lot of uncertainty” about the level of rate hikes, but expected rates to be higher than previously expected.

Determining how much interest rates rise are readings on public health, labor market conditions, inflation, and financial and international developments.

Powell added that the longer the current high inflation rate persists, the more likely it is that inflation expectations will become entrenched.

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He said now is not the time to consider when rate hikes might slow, and that continued rate hikes are needed to reach levels that are “sufficiently restrained.”

Economists say the impact of these rate hikes is already having a negative impact on the economy.

“A Fed-induced recession remains a very real and dangerous possibility,” said Rakeen Mabud, chief economist and managing director of policy and research at Groundwork Collaborative.

“The slowdown in the housing market is the canary in the coal mine – if Chairman Powell continues his rate-bending policy, we will all pay the real price.”

If interest rates continue to rise, it could lead to a deeper recession than the post-global financial crisis, UNCTAD (UNCTAD) issues a warning.

The rate was 0% at the start of the year, but the Fed has gradually raised it in five announcements. Low interest rates were reached during the pandemic, when the Fed wanted to borrow cheaply for businesses and consumers to stay financially healthy.

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The Fed has not embarked on such an aggressive monetary tightening campaign since the early 1980s, and Powell said on Wednesday that rate hikes were growing at a “historically rapid rate.”

Before Wednesday’s rate hike, the Fed had already raised rates in September, June and July, the most since 1994.

The Fed is just one of many central banks targeting interest rates as inflationary pressures push living cost Crisis across economies.

Thursday, Bank of England It is also expected to raise its benchmark interest rate by 0.75% to 3%.

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