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US Federal Reserve Raises Rates by 75 Basis Points to Tackle Soaring Inflation
US Federal Reserve Raises Rates by 75 Basis Points to Tackle Soaring Inflation
Sputnik International
Treasury Secretary Janet Yellen expressed support for the Federal Reserve’s plan to double interest rates to bring down the “unacceptably high” level of... 27.07.2022, Sputnik International
2022-07-27T14:19+0000
2022-07-27T14:19+0000
2022-08-06T13:36+0000
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us federal reserve
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US Federal Reserve raised interest rates by 75 basis points, or three-quarters of a percentage point, amid concerns that its fight against inflation may push the country into a recession.Federal Reserve Chairman Jerome Powell warned that the United States could see another exceptionally high interest rate hike as inflation remains extremely challenging."Another unusually large increase, could be appropriate at our next meeting. That is a decision that will depend on the data we get," Powell told a news conference.The move marks the Fed’s fourth interest rate hike of the year as consumer prices in the US have increased at the fastest pace in more than 40 yearsThe central bank also said it would proceed with balance sheet reductions as planned from September, cutting the tens of billions of dollars it spent each month in bond buying to support the one-time pandemic-struck economy.Last month, the Federal Open Market Committee raised the federal funds rate by 75 basis points for the first time in nearly 30 years following an increase of 25 basis points and 50 basis points in March and May, respectively.“That’s really hard, because a lot of inflation is coming from things that are out of their control,” the economist added.This view was shared by Karen Shaw Petrou, managing partner at Federal Financial Analytics, who argued that the challenges facing the Fed “have only gotten” worse since it raised rates in June.The remarks followed Federal Reserve Chairman Jerome Powell stressing that slashing inflation back to the Fed’s target range is far more important to the long-term health of the US economy.Last weekend, Treasury Secretary Janet Yellen, who also previously served as chair of the Federal Reserve, admitted that the country’s economy is “slowing down” but insisted that it is not an economy in recession.This came after fresh data released by the Bureau of Labor Statistics earlier this month, which revealed that inflation in the US surged to a new COVID-19 pandemic-era peak in June, with consumer prices jumping by 9.1% year-over-year.
https://sputnikglobe.com/20220702/us-unlikely-to-avoid-severe-recession-if-fed-hikes-interest-rates-too-quickly-to-cool-inflation-1096878611.html
https://sputnikglobe.com/20220618/absolute-explosion-of-inflation-to-hit-us-in-13-days-affecting-midterms-gop-pollster-warns-1096430526.html
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us, us federal reserve, interest rates, jerome powell, inflation
US Federal Reserve Raises Rates by 75 Basis Points to Tackle Soaring Inflation
14:19 GMT 27.07.2022 (Updated: 13:36 GMT 06.08.2022) Treasury Secretary Janet Yellen expressed support for the Federal Reserve’s plan to double interest rates to bring down the “unacceptably high” level of inflation last week, and assured that the issue was the Biden administration’s “top priority.”
US Federal Reserve raised interest rates by 75 basis points, or three-quarters of a percentage point, amid concerns that
its fight against inflation may push the country into a recession.
“The Committee decided to raise the target range for the federal funds rate to 2-1/4 to 2-1/2 percent percent and anticipates that ongoing increases in the target range will be appropriate,” the central bank’s Federal Open Market Committee, or FOMC, said in a statement on its monthly rate decision for June.
Federal Reserve Chairman Jerome Powell warned that the United States could see another exceptionally high interest rate hike as inflation remains extremely challenging.
"Another unusually large increase, could be appropriate at our next meeting. That is a decision that will depend on the data we get," Powell told a news conference.
The move marks the Fed’s fourth interest rate hike of the year as consumer prices in the US have increased at the fastest pace in more than 40 years
The central bank also said it would proceed with balance sheet reductions as planned from September, cutting the tens of billions of dollars it spent each month in bond buying to support the one-time pandemic-struck economy.
Last month, the Federal Open Market Committee raised the federal funds rate by 75 basis points for the first time in nearly 30 years following an increase of 25 basis points and 50 basis points in March and May, respectively.
Mark Zandi, chief economist at Moody’s Analytics, told the Hill that “to the Fed, obviously job No. 1 is getting inflation down, and hopefully down without setting the economy in recession, but that isn’t a prerequisite”.
“That’s really hard, because a lot of inflation is coming from things that are out of their control,” the economist added.
This view was shared by Karen Shaw Petrou, managing partner at Federal Financial Analytics, who argued that the challenges facing the Fed “have only gotten” worse since it raised rates in June.
“You got no meaningful curb on inflation, even with a sharp rate rise. At the same time, financial market stresses and the impact of this inflation on household spending are curbing economic growth. It’s the worst of both worlds. There’s no good answer,” Petrou said.
The remarks followed Federal Reserve Chairman Jerome Powell stressing that slashing inflation back to the Fed’s target range is far more important to the long-term health of the US economy.
“We fully understand and appreciate the pain people are going through dealing with higher inflation. We have the tools to address that and the resolve to use them. The process is likely — highly likely — to involve some pain, but the worst pain would be from failing to address this high inflation and allowing it to become persistent,” he pointed out.
Last weekend, Treasury Secretary Janet Yellen, who also previously served as chair of the Federal Reserve, admitted that the country’s economy is “slowing down” but insisted that it is not an economy in recession.
This came after fresh data released by the Bureau of Labor Statistics earlier this month, which revealed that inflation in the US surged to a new COVID-19 pandemic-era peak in June, with consumer prices jumping by 9.1% year-over-year.
