STORIES FROM AROUNDTHE GLOBETOP NEWS FOR ONLY $10
Home/News/The US Federal Reserve has raised interest rates for the first time since 2018

The US Federal Reserve has raised interest rates for the first time since 2018

The US Federal Reserve raised interest rates for the first time since 2018 to rein in soaring prices. The US Federal Reserve announced that it would raise interest rates by 0.25 percentage points and signaled plans for further rate hikes in the first few months.The move comes as the economy faces re

The US Federal Reserve has raised interest rates for the first time since 2018
Written byTimes Magazine
The US Federal Reserve has raised interest rates for the first time since 2018

The US Federal Reserve raised interest rates for the first time since 2018 to rein in soaring prices. The US Federal Reserve announced that it would raise interest rates by 0.25 percentage points and signaled plans for further rate hikes in the first few months.

The move comes as the economy faces renewed uncertainty caused by the war in Ukraine and the coronavirus outbreak in China. They are expected to have far-reaching global implications. As a result, the Fed will provide more expensive loans to households, businesses, and governments by raising interest rates.

We expect this to the tremendous demand for goods and services, which will help reduce price inflation in the United States, which hit a new 40-year high of 7.9% last month. "The plan is to restore price stability while maintaining a strong labor market," said Federal Reserve Chair Jerome Powell. "That's our intention, and we believe we can do it, but we need to restore price stability."

"We will not allow high inflation to escalate," he said. "The cost will be too high." So instead, banks are trying to achieve an "intermediation high," said Diane Swank, chief economist at accounting firm Grant Thornton.

If you move too slowly, inflation can increase and, over time, erode living standards. On the other hand, if you act too quickly, the Fed risks undermining growth in the United States and abroad. "They want to ease inflationary pressures without derailing the global economy," he said.

The plan represents a significant change in policy at the bank, which controls the world's largest economy. The Fed has been cautiously raising interest rates since the 2008 financial crisis and lowering them again after the coronavirus pandemic. A rate hike announced on Wednesday is expected and moves the bank's target range to 0.25%-0.5%.

Forecasts released after the Fed meeting showed that workers also expect interest rates to rise by nearly 2% by the year - a percentage point higher than forecast in December.

In addition to high-interest rates, the Fed will remove another stimulus, including the massive purchases of Treasuries and other assets that started stabilizing markets at the start of the coronavirus crisis. And although banks have raised interest rates before, they haven't faced inflation like this in decades.

"It's no longer just about raising interest rates to match stronger growth," Swank said. 




Download App
Stay Updated

Get the app now.