Fed unleashes another big rate hike in bid to curb inflation

Washington, July 27 (BNA): The Federal Reserve (the US central bank), on Wednesday, raised the benchmark interest rate by three-quarters of a point for the second time in a row in its most aggressive effort in three decades to tame high inflation.

The Fed’s move will raise the key interest rate, which affects many consumer and business loans, to a range of 2.25% to 2.5%, its highest level since 2018, according to the Associated Press.

The central bank’s decision follows a jump in inflation to 9.1%, the fastest annual rate in 41 years, and reflects its strenuous efforts to slow price gains across the economy.

By raising borrowing rates, the Federal Reserve makes it more expensive to obtain a mortgage, car or business loan.

Consumers and businesses are then supposed to borrow and spend less, cooling the economy and slowing inflation.

The Fed is tightening credit even as the economy begins to weaken, raising the risk that higher interest rates will cause a recession later this year or next.

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