https://sputnikglobe.com/20220921/us-federal-reserve-ups-interest-rates-by-75-base-points-in-fifth-straight-anti-inflation-hike-1101062159.html
US Federal Reserve Ups Interest Rates by 75 Base Points in Fifth Straight Anti-Inflation Hike
US Federal Reserve Ups Interest Rates by 75 Base Points in Fifth Straight Anti-Inflation Hike
Sputnik International
The US Federal Reserve’s Federal Open Market Committee (FOMC) announced on Wednesday it was increasing the federal funds rate by another 75 base points, to... 21.09.2022, Sputnik International
2022-09-21T19:22+0000
2022-09-21T19:22+0000
2022-09-21T19:19+0000
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September is the fifth month in a row that the central bank has increased interest rates since deciding in April that rising inflation was no longer tolerable.Powell said he was confident the central bank was moving towards a point that will be sufficiently restrictive to return inflation to 2%. However, he also announced a higher expected annual inflation rate for the year: 5.4%, up from the previous estimate of 5.2%.Still, the most recent monthly Consumer Price Index (CPI) report from the Bureau of Labor Statistics has reported high inflation, with commodity prices in August being 8.3% higher than a year prior. The report showed the Fed’s actions have had little effect on inflation, which remains at a 40-year high point, and the anticipation of a more substantial rate hike by the central bank has kept Wall Street stocks down for weeks.Economists have also warned that more rate hikes will slow the economy, possibly triggering a deeper recession and a rise in unemployment, although according to Commerce Department statistics, the US has been in a recession since July.The Summary of Economic Projections from the Fed showed unemployment rate is expected to rise from its current 3.7% to 4.4% by next year, and that growth in the US gross domestic product (GDP) is forecast to be just 0.2% for 2022.
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US Federal Reserve Ups Interest Rates by 75 Base Points in Fifth Straight Anti-Inflation Hike
The US Federal Reserve’s Federal Open Market Committee (FOMC) announced on Wednesday it was increasing the federal funds rate by another 75 base points, to between 3% and 3.25%.
September is the fifth month in a row that the central bank has increased interest rates since deciding in April that rising inflation was no longer tolerable.
Fed chair Jerome Powell said on Wednesday that it would at some point become appropriate to slow the rate of interest rate increases, with the median forecast on Wednesday showing the bank expects to raise interest rates to at least 4.4% by the end of the year. However, it could continue to rise, hitting 5% in 2023.
Powell said he was confident the central bank was moving towards a point that will be sufficiently restrictive to return inflation to 2%. However, he also announced a higher expected annual inflation rate for the year: 5.4%, up from the previous estimate of 5.2%.
Still, the most recent monthly Consumer Price Index
(CPI) report from the Bureau of Labor Statistics has reported high inflation, with commodity prices in August being 8.3% higher than a year prior. The report showed the Fed’s actions have had little effect on inflation, which remains at a 40-year high point, and the anticipation of a more substantial rate hike by the central bank has
kept Wall Street stocks down for weeks.
While higher interest rates are intended to limit intra-bank lending and thus the creation of new money, an
April study by the Economic Policy Institute found that corporate profits accounted for 54% of inflation in the United States in the last two years, meaning the problem is price speculation, not overeager lenders.
Economists have also warned that more rate hikes
will slow the economy, possibly triggering a deeper recession and
a rise in unemployment, although according to Commerce Department statistics, the US has been in a recession since July.
The Summary of Economic Projections from the Fed showed unemployment rate is expected to rise from its current 3.7% to 4.4% by next year, and that growth in the US gross domestic product (GDP) is forecast to be just 0.2% for 2022.
