The FEDERAL Reserve, the equivalent of the U.S. central bank, has announced its biggest interest rate hike in nearly 30 years as it steps up efforts to combat soaring consumer prices.
The Fed said it raised the target range for the federal funds rate by 75 basis points to between 1.5% and 1.75%.
It was the third rate increase since March and came as U.S. inflation accelerated faster than expected last month.
Inflation is expected to move further, adding to the uncertainty.
Officials expect the Fees the Fed charges banks to borrow could hit 3.4% by year’s end, according to forecast documents released, and the ripple effects of those moves could spread to the public, raising the cost of mortgages, credit cards and other loans.
As central banks around the world take similar steps, it could mean big changes for a global economy that businesses and households have enjoyed for years of low interest rates.
1.The Fed’s interest rate hike and the “hard landing” of the stock market, housing and economy
2.The inflation monster: The U.S. consumer price index rose 7.5% in January, the highest in 40 years
3.Midterm elections: President Joe Biden’s approval ratings dropped and he tried to turn back the tide by declaring war on inflation
“Central banks in most advanced economies and some emerging markets are tightening in sync,” said Gregory Daco, chief economist at Ey-Parthenon, a strategy consulting firm.
“This is not a global environment that we’ve been used to over the last few decades, and this represents the impact that businesses and consumers around the world are going to face.”