Fed hikes interest rates by 0.75 points, biggest increase in 28 years

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The economy is slowing and the Federal Reserve raises its unemployment forecast

A man walks past a billboard advertising job openings in New York.
A man walks past a billboard advertising job openings in New York.EFE

The Federal Reserve has done something that just a few weeks ago seemed impossible: raise interest rates The official United States is 0.75 percentage points or, as they call it in financial markets jargon, 75 basis points. The decision, which hasn’t surprised experts, is a direct result of Terrible CPI Data for MayWhich reached 8.6% in the international rate.

China is imprisoned, according to the ‘Fed’, due to the tightening of monetary policy, which has exacerbated the economic crisis. supply chain crisis Triggered by Covid-19. There are additional consequences invasion of ukraine To create inflationary conditions which are difficult to control. However, the danger is not only on the price side. the economy is slowing down and in fact, the Federal Reserve has increased its unemployment forecast.

The last interest rate hike for this amount was exactly 27 years and 7 months ago on November 15, 1994. Inflation then was 2.6%. And the increase left official interest rates at 5.5%, that is, 1.9 points more increase in prices. Now, on the contrary, and despite the fact that inflation is 8.6%, rates have remained between 1.5% and 1.75% after this increase. so is monetary policy much looser now than thenHowever there is a general consensus among experts that the economy is more sensitive to increase in interest rates and hence, the upward trend in the price of money is not as great.

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