The US Federal Reserve on Wednesday made another major interest rate hike in a bid to stem soaring consumer prices.
The 75 basis point increase matches the decision taken at its previous meeting in June, and is the fourth time the Fed has raised its benchmark rate since March.
Inflation in the United States hit 9.1% last month, mainly due to higher fuel and food prices. This is the fastest rate since 1981 and well above the official target of 2%.
The increase in the cost of borrowing aims to force individuals and businesses to borrow less and spend less, thereby lowering prices. However, higher rates can reduce economic activity and trigger a recession.
Federal Reserve Chairman Jerome Powell admitted that parts of the economy were slowing, but said more rate hikes could come in the coming months despite the risks.
“We’re not trying to have a recession – and we don’t think we should,” he said.
The Fed had kept its benchmark interest rate close to zero since the start of the Covid-19 pandemic, but in March it began what has been widely described as one of the most aggressive hikes in history. these last decades. After Wednesday’s hike, the target for the federal funds rate — which sets how much banks charge each other for short-term loans but is also a benchmark for other lending rates — is between 2.25% and 2.25%. .50%.
Warnings of an impending crisis in the United States began to sound more frequently. Renowned economist Nouriel Roubini, dubbed “Doctor Doom” by Wall Street for predicting the 2008-09 financial crisis, said earlier this week that the country was headed for a severe recession and a severe debt crisis and financial.
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