The Federal Reserve Board announced Wednesday that it would raise the benchmark policy rate by three-quarters percentage points. This is an aggressive hike aimed at curbing stubborn and rapid inflation, the largest rise since 1994 for central banks. The New York Times.
Federal Reserve Chair Jerome H. Powell said similar scales could continue next month. The increase indicates that the central bank is determined to keep prices under control, even if it means it causes financial distress.
-
Higher policy rates will make buying homes and expanding businesses more expensive, which will curb spending and slow down the wider economy.
-
Staff predict By late 2024, its unemployment rate will rise slightly by about 0.5 percentage points as it puts pressure on businesses and workers.
-
Powell also acknowledged that the Fed is becoming increasingly difficult to achieve a “soft landing” that slows inflation without causing a recession.
-
Interest rates are expected to reach 3.4% by the end of 2022, officials said. Economic forecast They released on Wednesday. This is the highest level since 2008.
-
Stock prices have plummeted and bond market signals are flashing red as Wall Street traders and economists increasingly expect the economy to fall into recession. Wednesday’s S & P 500 rose 1.5%. This is probably because investors had already expected a major move for the Fed.
-
The future economic path may be volatile, but Fed policymakers argue that it is better not to act. Workers’ wages are not catching up as prices soar. That means the family is lagging behind because they are trying to pay for gas, food and rent.
Read the full article →
